<PAGE>
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K
(Mark One)
[ X ] Annual report pursuant to section 13 or 15(d) of the Securities Exchange
      Act of 1934

                   For the fiscal year ended December 31, 2000
                                             -----------------
                                       or
[   ] Transition report pursuant to section 13 or 15(d) of the Securities
      Exchange Act of 1934
           For the transition period from ____________ to ___________

                         Commission File Number 0-20807

                                 ICT GROUP, INC.
             (Exact name of registrant as specified in its charter.)

         Pennsylvania                           23-2458937
(State or other jurisdiction of              (I.R.S. Employer
incorporation or organization)               Identification No.)

          800 Town Center Drive
         Langhorne, Pennsylvania                         19047
(Address of principal executive offices)              (Zip Code)

        Registrant's telephone number, including area code: 215-757-0200

        Title of each class:          Name of each exchange on which registered:
               None                                       None

        Securities registered pursuant to Section 12(b) of the Act: None

           Securities registered pursuant to Section 12(g) of the Act:
                       Common Stock, par value $.01


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days: YES _X_ NO ___

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

The aggregate market value of the voting stock held by non-affiliates of the
registrant is approximately $50,479,665. Such aggregate market value was
computed by reference to the closing price of the Common Stock as reported on
the National Market of The Nasdaq Stock Market on March 16, 2001. For purposes
of this calculation only, the registrant has defined affiliates as including all
directors and executive officers. In making such calculation, registrant is not
making a determination of the affiliate or non-affiliate status of any holders
of shares of Common Stock.

The number of shares of the registrant's Common Stock outstanding as of March
16, 2001 was 12,084,550.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of Registrant's definitive Proxy Statement relating to the 2001 Annual
Meeting of Shareholders are incorporated by reference into Part III hereof.

<PAGE>


                                 ICT GROUP, INC.

                             FORM 10-K ANNUAL REPORT
                     For Fiscal Year Ended December 31, 2000

                                TABLE OF CONTENTS

PART I
                                                                            Page
                                                                            ----
Item 1.  Business..............................................................1

Item 2.  Properties............................................................9

Item 3.  Legal proceedings.....................................................9

Item 4.  Submission of Matters to a Vote of Security Holders...................9


PART II

Item 5.  Market for registrant's common equity
           and related stockholder matters....................................10

Item 6.  Selected financial data..............................................11

Item 7.  Management's discussion and analysis of financial condition
           and results of operations..........................................12

Item 7A. Qualitative and quantitative disclosure about market risk............14

Item 8.  Financial statements and supplementary data..........................15

Item 9.  Changes in and disagreements with accountants on accounting
           and financial disclosure...........................................15


PART III

Item 10. Directors and executive officers of the registrant...................15

Item 11. Executive compensation...............................................15

Item 12. Security ownership of certain beneficial owners and management.......15

Item 13. Certain relationships and related transactions.......................15


PART IV

Item 14. Exhibits, financial statement schedules, and reports on form 8-K.....15



                                       -i-

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This document contains certain forward-looking statements that are subject to
risks and uncertainties. Forward-looking statements include certain information
relating to outsourcing trends as well as other trends in the CRM services
industry and the overall domestic economy, the Company's business strategy
including the markets in which it operates, the services it provides, its
ability to attract new clients and the customers it targets, the benefits of
certain technologies the Company has acquired or plans to acquire and the
investment it plans to make in technology, the Company's plans regarding
international expansion, the implementation of quality standards, the
seasonality of the Company's business, variations in operating results and
liquidity, as well as information contained elsewhere in this document where
statements are preceded by, followed by or include the words "believes,"
"plans," "intends," "expects," "anticipates" or similar expressions. For such
statements, the Company claims the protection of the safe harbor for
forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995. The forward-looking statements in this document are subject to
risks and uncertainties that could cause the assumptions underlying such
forward-looking statements and the actual results to differ materially from
those expressed in or implied by the statements.

The most important factors that could prevent the Company from achieving its
goals--and cause the assumptions underlying the forward-looking statements and
the actual results of the Company to differ materially from those expressed in
or implied by those forward-looking statements--include, but are not limited to,
the following: (i) the competitive nature of the CRM services industry and the
ability of the Company to continue to distinguish its services from other CRM
service companies and other marketing activities on the basis of quality,
effectiveness, reliability and value; (ii) economic conditions which could alter
the desire of businesses to outsource certain sales and service functions and
the ability of the Company to obtain additional contracts to manage outsourced
sales and service functions; (iii) the ability of the Company to offer
value-added services to businesses in its targeted industries and the ability of
the Company to benefit from its industry specialization strategy; (iv) risks
associated with investments and operations in foreign countries including, but
not limited to, those related to relevant local economic conditions, exchange
rate fluctuations, relevant local regulatory requirements, political factors,
generally higher telecommunications costs, barriers to the repatriation of
earnings and potentially adverse tax consequences; (v) technology risks
including the ability of the Company to select or develop new and enhanced
technology on a timely basis, anticipate and respond to technological shifts and
implement new technology to remain competitive; (vi) the ability of the Company
to successfully identify, complete and integrate strategic acquisitions that
expand or complement its business; and (vii) the results of operations which
depend on numerous factors including, but not limited to, the timing of clients'
teleservices campaigns, the commencement and expiration of contracts, the timing
and amount of new business generated by the Company, the Company's revenue mix,
the timing of additional selling, general and administrative expenses and the
general competitive conditions in the CRM services industry and the overall
economy.


                                     PART I

ITEM 1.  BUSINESS

         ICT Group, Inc. (the "Company" or "ICT") is a leading global supplier
of customer relationship management (CRM) solutions. The Company provides
integrated telesolutions, e-solutions and market solutions helping its clients
identify, acquire, retain, service, measure, and maximize the lifetime value of
their customer relationships. ICT's telesolutions offering includes outbound
telesales and inbound customer support for sales and service applications,
domestically and internationally. Its e-solutions offering provides real-time
interaction-driven customer support for Internet sales and service applications
through Web-enabled customer contact center services, e-mail management and
processing, and multi-channel CRM services. Market research, database marketing,
and data mining capabilities are available through its market solutions
offering, including questionnaire design, telephone interviewing, and data
coding, tabulating, and analysis services.

The Company's customer management services experience, Internet and CRM
technology capabilities and expertise in select target industries enables it to
provide its clients with high quality cost-effective solutions. These solutions
have been available from the company on an outsourced basis, using ICT's
customer contact centers, and now the Company believes that there is also a
trend by businesses to purchase them on a hosted or co-sourced basis.
Accordingly, ICT has begun offering these services through a hosted arrangement,
using the client's staff facility, or on a co-sourced basis, using both the
client's operation and ICT's technologically compatible customer contact
centers. To accomplish this, the Company launched iCT ConnectedTouch, LLC in the
year 2000. This wholly-owned subsidiary provides hosted technology solutions and
consultative services for in-house CRM service operations.


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Industry Overview:

The CRM services market includes traditional activities such as outbound and
inbound customer sales and service, Internet-based sales and service support,
and marketing services including database marketing, market research, and data
mining. Customer contact center outsourcing services have evolved significantly
in recent years, with the expansion of e-business and Internet sales and service
programs. The Company believes that this trend will continue and anticipates
expanded demand for its services.

The Company believes that there are major shifts in the way businesses interact
with customers in today's Internet enhanced marketplace. E-commerce has grown
dramatically and with the addition of this new channel comes an increasing need
for businesses to build customer loyalty and optimize the value of their
customer relationships. To remain competitive in today's multi-channel, global
marketplace, companies are realizing the importance of implementing an
integrated CRM solution to effectively attract, acquire, retain and service
customers, and measure customer satisfaction, at every touchpoint in the
customer contact cycle.

ICT believes that the industries it has traditionally served will expand their
CRM programs to include e-solutions and market solutions. These vertical markets
include: insurance, financial services, telecommunications/ utilities,
pharmaceutical and health care services, and information technology. In addition
to these markets, the Company also believes that companies outside its
traditional targeted markets will also embrace these trends.

In addition to the traditional outsourced CRM services market, the Company is
now serving the in-sourced market which represents more than 80% of all contact
center expenditures today through its suite of hosted CRM technology solutions.

ICT Approach:

ICT believes that it has distinguished itself in the CRM solutions industry by
providing a range of integrated telesolutions, e-solutions and market solutions
for domestic and international clients to identify, acquire, retain, service,
measure and maximize the lifetime value of their customers. With extensive
experience in customer management services as well as strategic relationships
with technology leaders, the Company's management team has emphasized its CRM
experience, global infrastructure, economies of scale, technology leadership and
expertise in target industries as a means of establishing ICT as a global
supplier of integrated CRM solutions.

The Company's aggressive technology and business development initiatives
differentiate ICT from traditional contact center competitors. Additionally,
ICT's scalability, customer service experience and international capabilities
differentiate the Company from newly established customer service providers. The
Company's subsidiary, iCT ConnectedTouch, is differentiated from technology-only
providers because ICT uses the technologies in its contact centers. Accordingly,
management knows how to make the solutions work to the advantage of ICT's
clients.

Strategy

         The Company's growth strategy includes the following key elements:

         o Target the In-Sourced CRM Market - Through the Company's wholly-owned
subsidiary, iCT ConnectedTouch, the Company plans to capture opportunities in
the in-sourced CRM market. In addition to CRM technology hosting solutions, iCT
ConnectedTouch supports these in-house operations through contact center
management, training, process management and systems integration consulting
services using the Company's own resources and those of its strategic partners.

         o Pursue E-Commerce Opportunities. The Company plans to pursue
opportunities presented by the growth in demand for consistent, personalized
customer support for e-commerce sales and service. By aggressively building our
Internet support services while concurrently leveraging our existing management,
operations, systems, and sales infrastructure, ICT can offer cost-effective,
multi-channel CRM services to a wide array of customers domestically and
internationally.

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         o Expand Value-Added Services. The Company will continue to complement
its core telesolutions expertise with additional value-added services, such as
database marketing, research and consulting services, as well as a complete
suite of comprehensive CRM services. The Company's goal is to offer a robust,
integrated suite of telesolutions, e-solutions and market solutions to help its
clients maximize the lifetime value of their customer relationships.

         o Develop Strategic Alliances and Acquisitions. ICT intends to continue
pursuing strategic alliances with, and acquisitions of, domestic and
international businesses that provide complementary CRM services. The Company is
currently utilizing state-of-the-art CRM software and Internet platform
technologies from leading edge partners such as Aspect Communications
Corporation, Siebel Systems, Inc., Oracle and Cisco.

         o Increase International Presence. The Company plans to broaden its
geographic reach and further develop its expertise in CRM services in
international markets by focusing on businesses with multinational operations.
ICT currently provides multilingual services in the United States, Europe, Latin
America, Canada and Australia. ICT intends to expand its operations in these
areas.

           o Focus on Industry Specialization. The Company believes it has
gained a competitive advantage by concentrating on servicing businesses in a
limited number of targeted industries and intends to maintain its industry
specialization. In addition, the Company believes that this specialization will
enable it to attract new clients because of its industry expertise.

         o Maintain Technology Investment. The Company intends to continue
making substantial investments in technology to maintain its technological
strength within the CRM services industry. ICT has been an industry leader in
the implementation of innovative CRM technologies to lower its effective cost
per contact and to improve its sales and customer service. The Company has made
significant investments in information and communications technologies and
believes it was among the first to offer fully automated CRM services,
collaborative web browsing services and to implement predictive dialing
equipment that it believes is now recognized industry-wide to be essential in
handling consumer outbound telemarketing.

         o Continue Commitment to Quality Service. ICT has consistently
emphasized quality service and extensive employee training by investing in
quality assurance personnel and procedures. The Company intends to continue its
commitment to providing quality service, as illustrated by its achieving ISO
9002 certification in all its domestic and international sales and service
focused business units.

ICT's Services

           ICT delivers its telesolution, e-solution and market solution CRM
services through three business segments which are supported by the Company-wide
marketing, sales, systems and corporate units. ICT's sales force and operating
units are organized into a series of industry sectors focused on selling and
supporting the full range of the Company's services to clients in their
respective target industries. ICT believes this organizational structure allows
the Company to provide comprehensive solutions to its clients' CRM service
needs, since it enables ICT's sales and customer service personnel to develop
in-depth knowledge of the needs of businesses in their designated industries.

         In February 2000, ICT announced the formation of iCT
ConnectedTouch, LLC a new wholly owned subsidiary that provides hosted
technology solutions and consultative services for in-house customer service
operations.

         Domestic TeleServices

         Traditional teleservices are offered in the United States through the
Company's Domestic TeleServices segment, which is comprised of the TeleDirect
and TeleSolutions business units.

         ICT TeleDirect. ICT TeleDirect provides teleservices support activities
primarily for the insurance and financial products and services, credit card and
endorsed products sectors.

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         ICT TeleSolutions. ICT TeleSolutions provides teleservices support
activities primarily for the telecommunications, information services, energy
services and media industries.

         International Services

         The Company offers multilingual teleservices and customer care services
through four business units comprising ICT International Services. The growth of
multinational corporations and the increase in non-English speaking residents in
the United States has increased the demand for the multilingual capabilities
that ICT provides. The segment currently consists of the following units:

         ICT Eurotel. Eurotel provides pan-European, multilingual teleservices
and customer care services to Europe from its contact centers in Athlone,
Ireland, Dublin, Ireland and London, England.

         ICT Spantel. Spantel provides bi-lingual English and Spanish
teleservices from its Miami, Florida contact center to the rapidly growing
marketplace of Spanish-speaking American and Latin American consumers and
businesses.

         ICT Canada. The Company opened its first Canadian contact center in
January 1996 with service representatives who are fluent in French and English.
As of December 31, 2000, ICT Canada has contact centers located in Miramichi,
Moncton and Riverview, New Brunswick, Canada and in Halifax, New Glasgow and
Sydney, Nova Scotia, Canada.

         ICT Australia. This unit was formed in the first quarter of 1999 to
provide telemarketing services for multinational companies in the Pacific Rim.
As of December 31, 2000, ICT Australia operated a contact center in Sydney,
Australia.

         Customer Management Services

         ICT provides businesses in its highly targeted industries with
marketing, research and consulting services, and ongoing customer care services,
through its Customer Management Services segment. This segment presently
consists of the following business units:

         ICT Financial Marketing Services. This business unit's management team
consists of professionals who have client-side banking experience in branch
management and operations, marketing, advertising, research, electronic funds
transfer, home and branchless banking, customer service and systems support. As
of December 31, 2000, ICT Financial Marketing Services operated dedicated
inbound/outbound contact centers in Amherst, New York and Morrilton, Arkansas.

         ICT Medical Marketing Services. Through this business unit, ICT
provides service for the increasingly complex needs of healthcare and
pharmaceutical clients. This unit is staffed by dedicated staff to meet the
sophisticated product and customer profiles of specific clients. As of December
31, 2000, ICT Medical Marketing Services operated a dedicated contact center in
Langhorne, Pennsylvania.

         ICT Research Services. This business unit provides businesses with
value added market research survey design, data collection and consulting
services. ICT's Research Services makes extensive use of advanced technology,
including integrated predictive dialing and Computer Assisted Telephone
Interviewing software, to obtain market and customer data cost effectively. As
of December 31, 2000, ICT Research Services conducted surveys from centers in
Depew, New York and Langhorne, Pennsylvania.

         Customer Care Management Services. This business unit was established
in mid-1996 to pursue outsourcing opportunities for customer care management.
This division offers services such as site and system equipment consultation,
facility launch, program planning and implementation, staffing, technical
support and ongoing customer care management. Depending on client needs, ICT
will assume sole or shared responsibilities for the management of a client's
customer care operations. As of December 31, 2000 this business unit operated
contact centers in Lakeland, Florida, Langhorne, Pennsylvania, and Spokane,
Washington.

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Contact Center Facilities

         The following table lists the Company's contact center facilities as of
December 31, 2000:

------------------------------------------------------------------------------
                                  Locations
------------------------------------------------------------------------------
Morrilton, AR; Newark, DE; Fort Lauderdale, FL; Lakeland, FL; Miami, FL;
Louisville, KY; Calais, ME; Lewiston, ME; Oxford, ME; Pittsfield, ME; Wilton,
ME; Amherst, NY; Depew, NY; Lancaster, OH; Allentown, PA; Bensalem, PA;
Bloomsburg, PA; Burnham, PA; Dubois, PA; Langhorne, PA(3); Lockhaven, PA;
Trevose, PA; Chesapeake, VA; Christiansburg, VA; Norfolk, VA; Spokane, WA;
Falling Waters, WV; Martinsburg, WV; Parkersburg, WV; Westover, WV; Halifax,
Nova Scotia, Canada; Miramichi, New Brunswick, Canada; Moncton, New Brunswick,
Canada; New Glasgow, Nova Scotia, Canada; Riverview, New Brunswick, Canada;
Sydney, Nova Scotia, Canada; Athlone, Ireland; Dublin, Ireland; London, U.K.;
and Sydney, Australia.
------------------------------------------------------------------------------

Target Industries

         ICT's domestic sales force is assigned to specific industry sectors,
which enables its sales personnel to develop in-depth industry and product
knowledge. Several of the industries that ICT serves are undergoing deregulation
and consolidation, which provides the Company with additional opportunities as
businesses search for low cost solutions for their marketing, sales and customer
support needs. In 2000, business within the insurance and financial services
industries accounted for 64% of the Company's revenues. The industries targeted
by the Company and the principal services provided are described below.

         Insurance

         ICT works with large consumer insurance companies to market and provide
customer support services for products such as life, accident, health, and
property and casualty insurance. The Company's insurance group operates numerous
dedicated contact centers and in 2000, the Company sold more than two million
insurance policies on behalf of its clients. ICT employs approximately 500
agents licensed in life, A&H and P&C including bilingual agents in the U.S. and
Canada. The Company has a full-service agent licensing and a continuing
education department, which enables its agents to obtain licenses in 48 states
and 8 Canadian provinces and to maintain their compliance with insurance
regulations. Insurance clients in 2000 include, but are not limited to, JCPenney
Life Insurance Company, Prudential and Sears Life Alliance.

           Financial Services

         ICT provides banks and other financial services clients with a wide
range of services, including card-holder acquisition, active account generation,
account balance transfer, account retention and customer service. With the
acquisition in 1995 of its Financial Marketing Services operations, ICT began
offering additional banking services, such as marketing and servicing home
equity loans, lines of credit, loan-by-phone, checking and deposit account
acquisition, mortgage loans and other traditional banking products. Among ICT's
financial services clients in 2000 are Advanta, Fleet, Discover, Captial One,
and Metris.

           Telecommunications/Utilities

         ICT provides teleservices and customer care management services for
major telecommunications companies for long distance, cellular and cable
products and services, regional telecommunications companies marketing advanced
telephone features, and companies which provide billing support services to
telecommunications carriers. Within the telecommunications/utilities industry,
ICT clients in 2000 include, but are not limited to, Verizon, Integretel, and
Rogers AT&T.

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         Pharmaceuticals and Health Care Services

         Leveraging ICT's insurance market position into the managed care
industry, the Company, through its ICT Medical Marketing Services business unit,
serves pharmaceutical manufacturers, medical advertising agencies, health
insurance companies, hospitals and other health care related suppliers, for the
sale and marketing of products to both health care professionals (hospitals,
physicians, pharmacists and nurses) and health care consumers (patients and
prospective patients). The applications the Company offers in this market
segment consist of business-to-business, business-to-professional and
business-to-consumer, utilizing inbound and outbound services to sell products,
to conduct market research, develop marketing databases and provide customer
service. Clients in this category in 2000 include, but are not limited to,
Pfizer, Blue Cross/Blue Shield and GlaxoSmithKline.

         Information Technology

         ICT provides sophisticated marketing resources for both outbound and
inbound applications on behalf of clients in the computer software and hardware
industries. Outbound applications include, but are not limited to, new customer
acquisition, customer retention and sales lead generation. Inbound applications
include, but are not limited to, customer service, first-level customer
technical support and the sale of personal computer-related products. ICT's
clients frequently integrate outbound and inbound call campaigns, seeking to
achieve favorable compounding results. Information technology clients in 2000
include, but are not limited to, Sony Computer Entertainment, AOL and AOL
Canada.

Technology

         ICT invests heavily in system and software technologies designed to
improve contact center production thereby lowering the effective cost per
contact made or received, and to improve sales and customer service
effectiveness by providing its sales and service representatives with real-time
access to customer and product information. Since January 1995, the Company has
invested over $73 million in information and communications systems and software
enabling it to use state-of-the-art contact center technology. ICT believes it
was one of the first fully automated teleservices company and among the first to
implement predictive dialing equipment for outbound telemarketing and market
research and to provide collaborative web browsing services. ICT realizes
significant cost savings through the use of innovative contact handling
technology, automatic call distributors ("ACD") and advanced scripting software,
all of which optimize agent utilization. An ACD is a phone switch that accepts
an inbound call from the public network and routes that call to the most
advantageous, available resource to handle the call. Scripting software is used
in contact centers to provide the agent with the appropriate information to use
during the contact and to specify the content and sequence of the information
captured from the customer.

         The Company utilizes a scalable set of UNIX and NT processors to
support its outbound and inbound contact center operations. The term scalable in
the computer industry generally means that a system or product line is
configured to work cost-effectively at both low and high volume. Dedicated UNIX
and NT processors are used for inbound contact centers while predictive dialing
systems, networked to UNIX and NT processors at the Company's corporate data
center, are used at each outbound contact center. The predictive dialing systems
support local call and data management: the UNIX and NT processors provide
centralized list management, data consolidation, report generation and
interfaces with client order processing systems.

         ICT Group uses a series of CRM software to prepare outbound and inbound
scripts, manage, update and reference client data files, collect statistical
transaction and performance data and assist in the preparation of internal and
client reports. This CRM software includes ICT Group's proprietary list
management system ("LMS") as well as IMA's Edge TeleBusiness Software and
Siebel's Contact Management systems. The use of the Edge and Siebel systems as
well as Oracle's database management system provides a scalable and robust suite
of applications to support our client's business needs.

         ICT accelerated enterprise developments of several technology solutions
in 2000. Included in the deployment strategy were: workforce management, digital
recording, quality monitoring and Siebel contact management solutions.


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Quality Assurance, Personnel and Training

         ICT emphasizes quality service and extensive employee training as a way
to compete effectively and invests heavily in quality assurance personnel and
practices. ICT's quality assurance and training departments are responsible for
the development and enforcement of contact center policies and procedures, the
selection and training of telephone service representatives, the training and
professional development of contact center management personnel, monitoring of
calls and verification and editing of all sales. Through the Company's quality
assurance department, both the Company and its clients are able to perform real
time on-site and remote call monitoring to maintain quality and efficiency.
Sales confirmations are recorded (with the customer's consent) in order to
verify the accuracy and authenticity of transactions. Additionally, ICT is able
to provide to its clients immediate updates on the progress of an ongoing
program. Access to this data allows ICT and its clients to identify potential
campaign shortfalls and to immediately modify or enhance the program. In 1998
the Company completed the installation of digital recording technology in all US
outbound centers. This installation allows the consolidation of all verification
activities into a centralized location and effectively created a "third party"
verification center. Verification results are now available to Operations and
Client Services by the end of the calling day. Also, each center can access the
recordings for review with supervisory staff or the service representative. The
Company's commitment to providing quality service is further illustrated by its
certification with ISO 9002 standards, which are administered by the
International Organization for Standardization and represent an international
consensus on the essential features of a quality system to ensure the effective
operation of a business. All domestic and international sales and service
focused business units were ISO 9002 registered as of December 31, 1999.

         Management believes that a key driver of ICT's success is the quality
of its employees. The Company tailors its recruiting and training techniques
toward the industries it serves. Service representatives receive a detailed
review of each program in which they are to participate along with training
regarding the background, structure and philosophy of the client that is
sponsoring the program. As is typical in the teleservices industry, over 90% of
the Company's service representatives are part-time employees. As of February
23, 2001, ICT employed approximately 8,800 persons, of which approximately 8,000
were service representatives. None of ICT's employees are currently represented
by a labor union. The Company considers its relations with its employees to be
good.

Clients

         The Company generally operates under month-to-month contractual
relationships with its teleservices clients. The pricing component of a contract
is often comprised of an initial fee, a base service charge and separate charges
for ancillary services. Service charges are generally based upon an hourly rate
for outbound calls and per-minute rates for inbound calls. On occasion, the
Company performs services for which it is paid commissions based on completed
sales. ICT's Customer Management Services unit typically enter into longer term,
contractual relationships that may contain provisions for early contract
terminations. The Customer Management Services segment's revenues represented
approximately $62.5 million, or 31%, of the Company's consolidated revenues in
2000.

         ICT targets those companies which it believes have the greatest
potential to generate recurring revenues to the Company based on their ongoing
direct sales and customer service needs. At December 31, 2000, ICT provided
direct sales and customer service to approximately 130 clients. The Company's
largest client in recent years has been JCPenney Life Insurance Company, which
accounted for approximately 18% of the Company's net revenues in 2000. No other
client accounted for more than 10% of the Company's net revenues in 2000.


Competition

         The CRM services industry is very competitive and the Company's
principal competition in its primary markets comes from large service
organizations, including, but not limited to, Convergys Corporation, SITEL
Corporation, TeleTech Holdings, Inc., APAC TeleService, Inc. and West
Corporation. The Company competes with numerous independent firms, some of which
are as large or larger than ICT, as well as the in-house operations of many of
its clients or potential clients. In addition, most businesses that are
significant consumers of these services utilize more than one teleservice firm
at a time and reallocate work among various firms from time to time. Some of
this work is contracted on an individual project basis, with


                                       7
<PAGE>


the effect that the Company and other firms seeking such business are required
to compete with each other frequently as individual projects are initiated.
Furthermore, the Company believes there is a trend among businesses with in
house contact center operations toward outsourcing the management of those
operations to others and that this trend may attract new competitors, including,
but not limited to, competitors that are substantially larger and better
capitalized than ICT, into the Company's market. Additionally, ICT faces
competitors in its CRM ASP offerings. This competition is primarily separated
into two categories: Software only ASPs and ASPs that provide both software and
services (Hybrid ASPs). The Company competes with several competitors in each of
these categories. Software only ASP companies that compete with ICT include:
LivePerson, FaceTime and eConvergent. Hybird ASP competitors would include:
PeopleSupport, Brigade Solutions and SafeHarbor.com. While the Company believes
it has more customer service experience and a broader technological offering
then its current competitors, in this market segment, new competition may be
attracted into ICT's e-solutions market.

Government Regulation

         Both the federal and state governments regulate telemarketing sales
practices. The Federal Telephone Consumer Protection Act of 1991 (the "TCPA,"),
enforced by the Federal Communications Commission, imposes restrictions on
unsolicited telephone calls to residential telephone subscribers. Under the
TCPA, it is unlawful to initiate telephone solicitations to residential
telephone subscribers before 8:00 a.m or after 9:00 p.m. local time at the
subscriber's location, or to use automated telephone dialing systems or
artificial or prerecorded voices to certain subscribers. Additionally, the TCPA
requires telemarketing firms to develop a written policy implementing a
"do-not-call" list, and to train its telemarketing personnel to comply with
these restrictions. The TCPA creates a right of action for both consumers and
state attorneys general. A court may award actual damages or minimum statutory
damages of $500 for certain violations, which may be trebled for willful or
knowing violations. Currently, the Company trains its service representatives to
comply with the regulations of the TCPA and programs its call management system
to avoid initiating telephone calls during restricted hours or to individuals
maintained on an applicable do-not-call list.

         The Federal Trade Commission (the "FTC") regulates both general sales
practices and telemarketing specifically. Under the Federal Trade Commission Act
(the "FTC Act"), the FTC has broad authority to prohibit a variety of
advertising or marketing practices that may constitute "unfair or deceptive acts
and practices." Pursuant to its general enforcement powers, the FTC can obtain a
variety of types of equitable relief, including injunctions, refunds,
disgorgement, the posting of bonds, and bars from continuing to do business, for
a violation of the acts and regulations it enforces.

         The FTC also administers the Federal Telemarketing and Consumer Fraud
and Abuse Prevention Act of 1994 (the "TCFAPA"). Under the TCFAPA, the FTC has
issued regulations prohibiting deceptive, unfair or abusive practices in
telemarketing sales. Generally, these rules prohibit misrepresentations of the
cost, quantity, terms, restrictions, performance or characteristics of products
or services offered by telephone solicitation or of refund, cancellation or
exchange policies. The regulations also regulate the use of prize promotions in
telemarketing to prevent deception and require that a telemarketer identify
promptly and clearly the seller on whose behalf the telemarketer is calling, the
purpose of the call, the nature of the goods or services offered and, if
applicable, that no purchase or payment is necessary to win a prize. The
regulations also require that telemarketers maintain records on various aspects
of their business. Analogous restrictions apply to industries regulated by the
SEC. The Company believes that it is in compliance with the TCPA and its
implementing regulations, as well as with the regulations promulgated pursuant
to the TCFAPA. Failure to comply with either the TCPA or the TCFAPA could
adversely affect or limit the Company's current or future operations.

         Most states have enacted statutes similar to the FTC Act generally
prohibiting unfair or deceptive acts and practices. Additionally, some states
have enacted laws and others are considering enacting laws targeted directly at
telemarketing practices. For example, telephone sales in certain states are not
final until a written contract is delivered to and signed by the buyer, and such
a contract often may be canceled within three business days. At least one state
also prohibits telemarketers from requiring credit card payment, and several
other states require certain telemarketers to obtain licenses, post bonds or
submit sales scripts to the state's attorney general. Under the more general
statutes, depending on the willfulness and severity of the violation, penalties
can include imprisonment, fines and a range of equitable remedies such as
consumer redress or the posting of bonds before continuing in business. Many of
the statutes directed specifically at telemarketing practices provide for a
private right of action for the recovery of damages or provide for enforcement
by state agencies permitting the recovery of significant civil or criminal
penalties, costs and attorneys' fees. There can be no assurance that any such
laws, if enacted, will not adversely affect or limit the Company's current or
future operations.

                                       8
<PAGE>

         Activity at the state level regarding laws that impact the teleservces
industry has intensified over the past several years. States have enacted a
variety of laws regulating marketing via telephone. Do Not Call Lists,
restricted hours or days, registration, request to continue solicitation and no
rebuttal laws are common in many states. At this writing thirteen states have
enacted Do Not Call legislation. ICT Group, Inc. complies with all of these
laws. The Quality Assurance department is responsible for compliance.
Participation on the Direct Marketing Association and the American Telemarketing
Associates Legislative Committees ensure timely notification of proposed
legislation.

ITEM 2.  PROPERTIES

         The Company's corporate headquarters are located in Langhorne,
Pennsylvania in leased facilities consisting of approximately 29,500 square feet
of office space rented under leases that expire in February 2002. The Company
also leases all of the facilities used in its contact center operations, as well
as office space in Chicago, Illinois, and Saddlebrook, New Jersey for its sales
offices. The leases for the Company's facilities expire generally between July
2001 and May 2009 and typically contain renewal options. The Company believes
that its existing facilities are suitable and adequate for its current
operations, but additional facilities will be required to support growth. In
January 2001 the Company signed a lease for a new corporate and divisional
headquarters facility. The lease is scheduled to commence in February 2002, is
for approximately 105,000 square feet and has a term of 15 years. The Company
believes that suitable additional or alternative space will be available as
needed on commercially reasonable terms.

ITEM 3.  LEGAL PROCEEDINGS

         From time to time, the Company is involved in litigation incidental to
its business. In the opinion of management, no litigation to which the Company
is currently a party is likely to have a material adverse effect on the
Company's results of operations, financial condition or liquidity, if decided
adversely to the Company.

         As previously reported by the Company, on October 23, 1997, a
shareholder, purporting to act on behalf of a class of ICT shareholders filed a
complaint in the United States District Court for the Eastern District of
Pennsylvania against the Company and certain of its directors. The complaint
alleges that the defendants violated the federal securities laws, and seeks
compensatory and other damages, including rescission of stock purchases made by
the plaintiff and other class members in connection with the Company's initial
public offering effective June 14, 1996. The defendants believe the complaint is
without merit, deny all of the allegations of wrongdoing and are vigorously
defending the suit. On February 2, 1998, the defendants filed a motion to
dismiss the complaint. On May 19, 1998, the complaint was dismissed by a judge
for the United States District Court for the Eastern District of Pennsylvania
with leave to plaintiff to file an amended complaint on narrow accounting
allegations. On June 22, 1998, plaintiffs filed a First Amended Class Action
Complaint purporting to bring negligence claims in connection with the Company's
initial public offering. The defendants continue to deny all allegations of
wrongdoing, believe the amended complaint is without merit and are vigorously
defending the suit. On November 3, 1998, the court granted a motion appointing
Rowan Klein and Michael Mandat as lead plaintiffs. On February 2, 1999, the
court dismissed the case without prejudice, directing that the case remain in
status quo, that the statute of limitations be tolled and that the parties
continue with discovery and advise the court if assistance by the court is
needed. Since that time the defendants filed a motion for summary judgement
seeking to have the case dismissed on the grounds that there is no material
issue of fact. Plaintiffs filed a response in opposition to defendant's motion
and also filed a motion to have the matter certified as a class action. In
September 2000, the Court entered orders dismissing the defendants motion for
summary judgement and plaintiffs motion for class certification without
prejudice, with leave to re-file such motions upon the completion of discovery.
The Company anticipates that further discovery will be conducted.

         On July 12, 1996, Main Street Marketing of America Incorporated ("Main
Street Marketing") brought a demand for arbitration against the Company in the
Commonwealth of Pennsylvania claiming damages as a result of the Company's
alleged breach of a service agreement under which the Company agreed to provide
Main Street Marketing with various data entry and data processing services
relating to Main Street Marketing's magazine subscription program. Main Street
Marketing alleges that the Company committed various breaches of the service
agreement and has demanded an award in excess of $15 million. The Company has
responded to this demand for arbitration by denying liability and
counterclaiming in an amount in excess of $125,000. Discovery has progressed in

                                       9
<PAGE>


this matter, and the arbitration is expected to be completed in August 2001. It
is not possible at this stage of the proceeding to evaluate the probable outcome
of this matter.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         None.


                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         The Company's Common Stock trades on the National Market segment of The
Nasdaq Stock Market under the symbol "ICTG." The following table sets forth, for
the periods indicated, the high and low sales prices as quoted on The Nasdaq
Stock Market.

Period                                              High            Low
------                                              ----            ---
Fiscal 1999:
         First Quarter                              4 1/2           2 5/8
         Second Quarter                             5 3/8           2 11/16
         Third Quarter                              9 5/8           4 1/2
         Fourth Quarter                            15 5/8           6 1/16

Fiscal 2000:
         First Quarter                             12 7/8           6 1/2
         Second Quarter                            10               4 1/2
         Third Quarter                             12 1/8           9 1/2
         Fourth Quarter                            11 7/8           8

         As of March 16, 2001, there were 52 holders of record of the Company's
Common Stock. On March 16, 2001, the closing sale price of the Common Stock as
reported by The Nasdaq Stock Market was $9.50.

         The Company has never declared or paid any cash dividends on its
capital stock. The Company currently intends to retain its earnings to finance
future growth and working capital needs and, therefore, does not anticipate
paying any cash dividends in the foreseeable future. Additionally, the Company's
bank agreements limits the payment of dividends.


                                       10
<PAGE>



ITEM 6.  SELECTED FINANCIAL DATA

         The following selected financial data are derived from the financial
statements of the Company. The data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in Item 7 and the consolidated financial statements and related
notes thereto included in Item 8.
<TABLE>
<CAPTION>
                                                                         For Year Ended December 31,
                                                     --------------------------------------------------------------------
                                                          1996            1997        1998        1999         2000
                                                     --------------------------------------------------------------------
                                                                   (In thousands, except per share amounts)
Statement of Operations Data:
<S>                                                      <C>             <C>         <C>        <C>          <C>
Net revenues                                             $ 71,599        $ 91,653    $120,982   $153,049     $198,609
                                                         --------        --------    --------   --------     --------
Operating expenses:
  Cost of services                                         38,537          50,662      69,588     84,390      111,545
  Selling, general and administrative                      30,708          37,009      47,012     60,080       74,826
  Nonrecurring compensation expense                        12,689            --          --         --           --
                                                         --------        --------    --------   --------     --------
                                                           81,934          87,671     116,600    144,470      186,371
                                                         --------        --------    --------   --------     --------
    Operating income (loss)                               (10,335)          3,982       4,382      8,579       12,238
Interest expense (income), net                                180            (398)        406        801        1,207
                                                         --------        --------    --------   --------     --------
Income (loss) before income taxes                         (10,515)          4,380       3,976      7,778       11,031
Income tax provision (benefit)                             (2,998)          1,708       1,550      3,033        4,302
                                                         --------        --------    --------   --------     --------
Net income (loss)                                        $ (7,517)       $  2,672    $  2,426   $  4,745     $  6,729
                                                         ========        ========    ========   ========     ========
Diluted earnings (loss) per share                        $  (0.72)       $   0.22    $   0.20   $   0.39     $   0.54
                                                         ========        ========    ========   ========     ========

Shares used in computing diluted
    earnings per share                                     10,407          12,044      12,023     12,261       12,454
                                                         ========        ========    ========   ========     ========
Pro Forma data:
    Historical loss before                               $(10,515)
        Income taxes
    Pro forma income tax benefit (1)                       (3,767)
                                                         --------
    Pro forma net loss (1)                               $ (6,748)
                                                         ========
    Pro forma diluted loss per share (1)                 $  (0.65)
                                                         ========
    Shares used in computing pro forma
        diluted loss per share                             10,407
                                                         ========
</TABLE>
<TABLE>
<CAPTION>
                                                                             As of December 31,
                                                     --------------------------------------------------------------------
                                                             1996            1997          1998        1999         2000
                                                     --------------------------------------------------------------------
                                                                               (In thousands)
Balance Sheet Data:
<S>                                                      <C>             <C>            <C>         <C>           <C>
Cash and cash equivalents                                $ 18,298        $ 17,711       $14,225     $12,239       $8,539
Working capital                                            27,066          25,530        27,093      26,767       23,277
Total assets                                               49,112          61,578        75,876      78,073       93,737
Long-term debt, less current maturities                     1,057           4,799        14,000      10,000        6,000
Capitalized lease obligations,
    less current maturities                                 1,296           1,498           833         308           --
Shareholders' equity                                       41,020          43,368        45,785      50,340       56,683

</TABLE>
-----------
(1)  A pro forma provision for income taxes for periods prior to the effective
     date of the Company's initial public offering has been computed as if the
     Company had been fully subject to federal and state income taxes.


                                       11
<PAGE>
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

Results of Operations

         The following table sets forth statement of operations data as a
percentage of net revenues for the periods indicated:
<TABLE>
<CAPTION>

                                                                                 Year Ended December 31,
                                                                ---------------------- ----------------- -----------------
                                                                        2000                 1999              1998
                                                                ---------------------- ----------------- -----------------
<S>                                                                      <C>                   <C>             <C>
Net revenues                                                           100.0%               100.0%            100.0%
                                                                       ------               ------            ------
Operating expenses
         Cost of services                                               56.2                 55.1              57.5
         Selling, general and administrative                            37.6                 39.3              38.9
                                                                        ----                 ----              ----
                                                                        93.8                 94.4              96.4
                                                                        ----                 ----              ----

                  Operating income                                       6.2                  5.6               3.6

Interest expense                                                          .8                   .8                .8
Interest income                                                          (.2)                 (.3)              (.5)
                                                                        ----                 ----              ----

                  Income before income taxes                             5.6                  5.1               3.3

Income tax expense                                                       2.2                  2.0               1.3
                                                                         ---                  ---               ---

Net income                                                               3.4%                 3.1%              2.0%
                                                                        ====                 ====              ====
</TABLE>

Year Ended December 31, 2000 and 1999

         Net Revenues. Net revenues increased 30% to $198.6 million from $153.0
million in 1999. Approximately 60% of the increase came from new customers, with
existing customers accounting for 40% of the increase. Revenues from the
Domestic TeleServices segment were $83.9 million in both 2000 and 1999,
primarily as a result of telesales campaigns which utilize credit card files, as
privacy concerns restrained marketing activities in the early part of 2000.
Business in this segment increased in the second half, as revenues for the
second half of 2000 grew 17% over the same period in 1999. Strong growth in the
International Services and Customer Management Services segments drove the
revenue growth for the year. International Services revenues grew 117% to $52.2
million from $24.0 million in 1999 with new customers accounting for
approximately 60% of the increase. Customer Management Services grew 39% to
$62.5 million from $45.1 million in 1999. Most of this growth was from new
clients.

         Cost of Services. Cost of services, which consist primarily of direct
labor and telecommunications costs, increased 32% to $111.5 million in 2000 from
$84.4 million in 1999. This increase is primarily the result of increased direct
labor required to support the increased revenue volume. As a percentage of
revenues, cost of services increased to 56% in 2000 from 55% in 1999 as an
increase in labor cost per production hour offset savings in telecommunication
costs per hour.

         Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 25% to $74.8 million in 2000 from $60.1
million in 1999 due to increased numbers of contact centers and workstation
capacity and additional sales and systems support implemented to support
business growth and the launch of CRM based technology services. As percentage
of revenues, selling, general and administrative expenses were 38% in 2000
versus 39% in 1999 as the Company was able to leverage its existing
infrastructure to support volume growth.

                                       12
<PAGE>

         Interest Expense, net. Net interest expense of $1.2 million in 2000
versus $801,000 in 1999 reflects the interest expense related to borrowings
against the Company's equipment line of credit and capital leases for capital
expansion offset by investment income. The increase in net interest expense is
primarily the result of increased average outstanding balances on line of credit
borrowings to fund capital expenditures in 2000 as compared to 1999.

         Provision for Income Taxes. Provision for income taxes increased $1.3
million to $4.3 million in 2000 from $3.0 million in 1999. For both 2000 and
1999, the provision for income taxes was approximately 39% of income before
taxes.

Years Ended December 31, 1999 and 1998

         Net Revenues. Net revenues increased 27% to $153.0 million from $121.0
million in 1998 primarily due to strong revenue growth from customers in the
insurance, telecommunications, and health care industries and our expansion into
Internet Support Services. Domestic TeleServices revenues grew 6% to $83.9
million from $79.0 million in 1998. Growth in this segment was restrained by a
slowdown in telesales campaigns which utilized credit card files. This low
growth rate resulted in reduced profitability for the Domestic TeleServices
segment. International revenues grew 80% to $24.0 million in 1999 from $13.4
million in 1998 due to our rapid growth in Europe, Canada, Spantel and the
Company's expansion into Australia. Customer Management Services revenues
increased 58% to $45.1 million from $28.6 million in 1998 reflecting the
addition and expansion of several customer care contracts.

         Cost of Services. Cost of services, which consist primarily of direct
labor and telecommunications costs, increased 21% to $84.4 million in 1999 from
$69.6 million in 1998, resulting from increased business activity in each of the
business units. The increase was primarily due to the increased direct labor
required to support the increased revenue volume. As a percentage of revenues,
cost of services decreased to 55% in 1999 from 58% in 1998, primarily due to
telecommunication costs per hour decreasing 19% through reductions in rates paid
to our domestic and international carriers combined with the increased ability
to pass through telecommunication costs on many of our customer care contracts.

         Selling, General and Administrative. Selling, general and
administrative expenses increased 28% to $60.1 million in 1999 from $47.0
million in 1998 largely due to the addition of facilities, contact center
personnel and other infrastructure to support increased calling volumes, as well
as our investment in marketing and systems to support our Internet Support
Services initiatives. As a percentage of revenues, selling, general and
administrative expenses were 39% in both 1999 and 1998.

         Interest Expense, net. Net interest expense reflects the interest
expense related to capital leases and term debt partially offset by investment
income. Net interest expense increased $395,000 to $801,000 in 1999 from
$406,000 in 1998 due to higher average outstanding debt and lower average
invested funds in 1999.

         Income Taxes. Income taxes increased $1.5 million to $3.0 million in
1999 from $1.5 million in 1998. In both 1999 and 1998, the provision for income
taxes was approximately 39% of income before taxes.

Quarterly Results and Seasonality

         The Company has experienced and expects to continue to experience
significant quarterly variations in operating results, principally as a result
of the timing of client programs, the commencement and expiration of contracts,
the timing and amount of new business generated by the Company, the Company's
revenue mix, the timing of additional selling, general and administrative
expenses to support the growth and development of existing and new business
units and competitive industry conditions.

         Historically, the Company's business tends to be strongest in the
second and fourth quarters due to the high level of client sales activity in the
spring and prior to the holiday season in the fall. In the first quarter,
telesales activity generally levels off or slows from the previous quarter as a
result of reduced client sales activity and client transitions to new marketing
programs during the first quarter of the calendar year. In addition, the Company
typically expands its operations in the first quarter to support anticipated
business growth beginning in the second quarter. As a result, selling, general
and administrative costs typically increase in the first quarter without a
commensurate increase in revenues, which results in decreased profitability for
the first quarter versus the previous fourth quarter. Also, demand for the


                                       13
<PAGE>

Company's telesales services typically slows or decreases in the third quarter
as the volume of business decreases during the summer months. In addition, the
Company's operating expenses increase during the third quarter as it expands
it's capacity in anticipation of higher demand for its services during the
fourth quarter. During Calendar 2000, the strong growth of the Customer
Management Services and International Services divisions throughout the year
caused sequential revenue increases in all four quarters.

Liquidity and Capital Resources

         Cash provided by operations in 2000 was $9.0 million compared to $11.5
million in 1999. The $2.5 million decrease is primarily due to an increase in
accounts receivable as net revenues continue to grow. Accounts receivable at
December 31, 2000 increased 47% from the balance at December 1999, slightly
lower than the revenue growth rate of 49% in the fourth quarter of 2000 compared
to the fourth quarter of 1999. This increase in accounts receivable was
partially offset by higher net income and depreciation, as well as an increase
in accounts payable and accrued expenses.

         Cash used in investing activities was $16.3 million in 2000 compared to
$8.6 million in 1999. The increase over the prior year is attributable to a
significant investment in software licenses for hosted CRM technology services
to be provided by our wholly owned subsidiary iCT ConnectedTouch and the
significant investment in capital expenditures made to increase capacity to
support the revenue growth of the Company. The Company added 1,753 workstations
in 2000, and operated 5,921 workstations at December 31, 2000. In 1999 the
Company added 752 workstations, and operated 4,168 workstations at December 31,
1999.

         Cash provided by financing activities was $4.4 million in 2000 versus
cash used in financing activities of $4.6 million in 1999. The $9.0 million
increase is primarily the result of borrowings totaling $8.5 million to fund
capital expenditures.

         The Company's operations will continue to require significant capital
expenditures. Historically, equipment purchases have been financed through the
Company's equipment Line of Credit, operating leases, and through capitalized
lease obligations with various equipment vendors and lending institutions. The
capital lease obligations are payable in varying installments through 2001.
Outstanding obligations under capitalized leases at December 31, 2000 were
$292,000. At December 31, 2000, term debt obligations were $10.0 million and
borrowings under the Company's Line of Credit were $8.5 million.

         In 1998, the Company signed a three-year, $45.0 million credit
agreement with BankBoston, N.A. and Summit Bancorp. At December 31, 2000,
outstanding obligations under the credit agreement were $18.5 million consisting
of long-term debt obligations of $10 million, and Line of Credit borrowings of
$8.5 million. The amount available under the credit agreement was $18.5 million.
Repayments of termed out amounts totaling $8.0 million have permanently reduced
the amount available to borrow under the Line of Credit.

         The Company's current credit agreement expires in the second quarter of
2001. The Company is currently negotiating a new credit agreement, however,
there are no assurances that an agreement will be reached with terms acceptable
to the Company. Management believes that cash on hand, together with cash flow
generated from operations and funds available under the Line of Credit will be
sufficient to finance the Company's current operations and planned capital
expenditures at least into 2002.

Recent Accounting Pronoucements

         In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No.
133, as amended by SFAS No. 137, "Accounting for Derivative Instruments and
Hedging Activities-Deferral of the Effective Date of FASB Statement No. 133 - an
amendment of FASB Statement No. 133", which must be adopted by the Company on
January 1, 2001, provides a comprehensive and consistent standard for the
recognition and measurement of derivatives and hedging activities. The Company
does not currently hold derivative instruments or engage in hedging activities,
and as such, the adoption of this pronouncement will not have any impact on the
Company's financial position or results of operations when adopted.

         In December 1999, the U.S. Securities and Exchange Commission issued
Staff Accounting Bulletin No. 101 ("SAB 101"). This pronouncement provides the
staff's views in applying generally accepted accounting principles to selected
revenue recognition issues. Accordingly, guidance is provided with respect to
the recognition, presentation and disclosure of revenue in the financial
statements. Adoption of SAB 101, as amended by SAB Nos. 101A and 101B, was to be
effective in the fourth quarter of 2000. The adoption had no effect on the
Company's financial condition or results of operations.

ITEM 7A. QUALITATIVE AND QUANTITATIVE DISCLOSURE ABOUT MARKET RISK

         The Company's operations are exposed to market risks primarily as a
result of changes in interest rates and foreign currency exchange rates. The
Company does not use derivative financial instruments for speculative or trading
purposes.


                                       14
<PAGE>

         Interest Rate Risk

         The Company's exposure to market risk for changes in interest rates
relates to its long term debt obligations. The fixed rate of 7% on the Company's
long term debt at December 31, 2000 approximates market rates; thus, the fair
value of the debt approximates its reported value. In the past the Company has
not entered into financial instruments such as interest rate swaps or interest
rate lock agreements. However, it may consider these instruments to manage the
impact of changes in interest rates based on management's assessment of future
interest rates, volatility of the yield curve and the Company's ability to
access the capital markets in a timely manner.

         Foreign Currency Risk

         The Company does not use foreign currency exchange contracts or
purchase currency options to hedge local currency cash flows. The Company has
operations in Canada, Ireland, the United Kingdom, and Australia which are
subject to foreign currency fluctuations. As currency rates change, translation
of income statements of these operations from local currencies to US dollars
affects year-to-year comparability of operating results. The Company's foreign
operations represent 21.5% of the Company's consolidated revenues for the year
ended December 31, 2000. In addition, foreign operations produced 14.0% of the
business associated with domestic revenues. Management does not expect the risk
of foreign currency fluctuations to be material.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The financial statements of the Company being filed under this Item 8
can be found beginning on page F-1 of this report.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

         None.


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         Information with respect to this item will be contained in the
Registrant's Proxy Statement for the 2001 Annual Meeting of Shareholders (the
"Proxy Statement"), which is hereby incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

         Information with respect to this item will be contained in the Proxy
Statement, which is hereby incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         Information with respect to this item will be contained in the Proxy
Statement, which is hereby incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Information with respect to this item will be contained in the Proxy
Statement, which is hereby incorporated herein by reference.


                                       15
<PAGE>

                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K


Financial Statements and Financial Statement Schedules

         See Index to Financial Statements at page F-1.


Reports on Form 8-K

         The Company did not file any reports on Form 8-K during the last
quarter of the period covered by this report.

Exhibits

         The following is a list of exhibits filed as part of this annual report
on Form 10-K. Where so indicated by footnote, exhibits which were previously
filed are incorporated by reference. For exhibits incorporated by reference, the
location of the exhibit in the previous filing is indicated parenthetically
except for in those situations where the exhibit number was the same as set
forth below.

      3.1         Articles of Incorporation. (2)
      3.2         Bylaws. (2)
      9.1         Amended and Restated Voting Trust Agreement among John J.
                  Brennan, Donald P. Brennan and the Company, dated October 16,
                  2000. (1) (Exhibit 10.11)+
      9.3         Form of Voting Agreement between the Company and certain
                  option holders. (1) (Exhibit 10.13)
     10.1         ICT Group, Inc. 1987 Stock Option Plan. (1) (2)+
     10.2         ICT Group, Inc. Equity Incentive Plan. (1)+
     10.3         ICT Group, Inc. Equity Compensation Plan. (2)+
     10.4         ICT Group, Inc. 1996 Non-Employee Directors Plan. (2)+
     10.5         Employment Agreement between John J. Brennan and the Company,
                  dated May 8, 1996.(2)+
     10.7         Employment Agreement between John L. Magee and the Company,
                  dated April 1, 1987. (1)+
     10.8         Employment Agreement between John D. Campbell and the Company,
                  dated October 1, 1987. (1)+
     10.11        Amended and Restated Shareholders Agreement among John J.
                  Brennan, Donald P. Brennan, the Company and certain family
                  trusts, dated October 16, 2000. (1) (Exhibit 10.12)+
     10.13        $45,000,000 Credit Agreement dated as of April 21, 1998 among
                  the Company, Eurotel Marketing Limited, Yardley Enterprises,
                  Inc., Harvest Resources, Inc., ICT/Canada Marketing, Inc., the
                  Lenders referred to therein, BankBoston, N.A. as
                  Administrative Agent and Summit Bank as Co-Agent (3) (Exhibit
                  10.13)
     10.14        Employment Agreement between Vincent A. Paccapaniccia and the
                  Company, dated August 24, 1998.
     10.15        First Amendment to Credit Agreement among the Company, Eurotel
                  Marketing Limited, Yardley Enterprises, Inc., Harvest
                  Resources, Inc., ICT/Canada Marketing, Inc., the Lenders
                  referred to therein, BankBoston, N.A. as Administrative Agent
                  and Summit Bank as Co-Agent (3) (Exhibit 10.13) dated December
                  22, 1998.
     10.17        Employment Agreement between Timothy F. Kowalski and the
                  Company, dated July 7, 1997

                                       16
<PAGE>

     10.18        Employment Agreement between Vincent M. Dadamo and the
                  Company, dated May 29, 1999
     10.19        ICT Group, Inc. Non-Qualified Deferred Compensation Plan
     10.20        iCT ConnectedTouch Option Plan*
     10.21        Employment Agreement between Pam Goyke and the Company, dated
                  September 11, 2000.*
     10.22        Employment Agreement between Dean Kilpatrick and the Company,
                  dated May 1, 1995.*
     10.23        Lease Agreement between Brandywine Operating Partnership,
                  L.P. and the Company, dated January 23, 2001.*
     21           List of Subsidiaries*
     23           Consent of Independent Public Accountants*

---------
*  Filed herewith.
+ Compensation plans and arrangements for executives and others.
     (1)    Filed as an exhibit to the Company's Registration Statement on Form
            S-1 on April 26, 1996 (Registration No. 333-4150).
     (2)    Filed as an exhibit to Amendment No. 2 to the Company's Registration
            Statement on Form S-1 on June 4, 1996 (Registration No. 333-4150).
     (3)    Filed as an exhibit to the Company's Quarterly Report on Form 10-Q
            on May 13, 1998.

                                       17
<PAGE>



                                   SIGNATURES


         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                            ICT GROUP, INC.
                                            (Registrant)

Dated:  March 30, 2001

                                            By:  /s/ John J. Brennan
                                               ------------------------------
                                                 John J. Brennan
                                                 Chairman, President and
                                                 Chief Executive Officer

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
         Signature                                   Title                                       Date
         ---------                                   -----                                       ----
<S>                                                   <C>                                          <C>
By:   /s/ John J. Brennan                   Chairman, President, Chief                        March 30, 2001
   --------------------------------         Executive Officer and Director
      John J. Brennan                       (principal executive officer)


By:  /s/ Vincent A. Paccapaniccia           Senior Vice President, Finance and                March 30, 2001
   --------------------------------         Administration, Chief Financial Officer
      Vincent A. Paccapaniccia              and Asst. Secretary (principal financial and
                                            accounting officer)


By:  /s/ Donald P. Brennan                  Director                                          March 30, 2001
   --------------------------------
      Donald P. Brennan

By:  /s/ Bernard Somers                     Director                                          March 30, 2001
   --------------------------------
      Bernard Somers

By:   /s/ John Stoops                       Director                                          March 30, 2001
   --------------------------------
      John Stoops

By:   /s/ Seth Lehr                         Director                                          March 30, 2001
   --------------------------------
      Seth Lehr
</TABLE>

                                       18
<PAGE>
                                EXHIBIT INDEX


Exhibit No.                Description
-----------                -----------
     9.1      Amended and Restated Voting Trust Agreement among John J. Brennan,
              Donald P. Brennan and the Company, dated October 16, 2000
    10.11     Amended and Restated Shareholders Agreement among John J. Brennan,
              Donald P. Brennan, the Company and certain family trusts, dated
              October 16, 2000.
    10.20     ICT ConnectedTouch Option Plan*
    10.21     Employment Agreement between Pam Goyke and the Company dated
              September 11, 2000*
    10.22     Employment Agreement between Dean Kilpatrick and the Company,
              dated May 1, 1995.*
    10.23     Lease Agreement between Brandywine Operating Partnership, L.P. and
              the Company, dated January 23, 2001.*
    21        List of Subsidiaries*
    23        Consent of Independent Public Accountants*


                                       19
<PAGE>

                        ICT GROUP, INC. AND SUBSIDIARIES

                 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND

                          FINANCIAL STATEMENT SCHEDULE




                                                                       Page
                                                                       ----
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS                                F-2

CONSOLIDATED BALANCE SHEETS                                             F-3

CONSOLIDATED STATEMENTS OF OPERATIONS                                   F-4

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY                         F-5

CONSOLIDATED STATEMENTS OF CASH FLOWS                                   F-6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                              F-7

FINANCIAL STATEMENT SCHEDULE:
    II. VALUATION AND QUALIFYING ACCOUNTS                              F-19




<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To ICT Group, Inc.:

We have audited the accompanying consolidated balance sheets of ICT Group, Inc.
(a Pennsylvania corporation) and subsidiaries as of December 31, 2000 and 1999,
and the related consolidated statements of operations, shareholders' equity and
cash flows for each of the three years in the period ended December 31, 2000.
These financial statements and schedule referred to below are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements and schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of ICT Group, Inc.
and subsidiaries as of December 31, 2000 and 1999, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2000, in conformity with accounting principles generally accepted
in the United States.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the Index to
Consolidated Financial Statements and Financial Statement Schedule is presented
for purposes of complying with the Securities and Exchange Commission's rules
and is not a required part of the basic financial statements. This schedule has
been subjected to the auditing procedures applied in our audits of the basic
financial statements and, in our opinion, fairly states in all material respects
the financial data required to be set forth therein in relation to the basic
financial statements taken as a whole.




                                                   ARTHUR ANDERSEN LLP

Philadelphia, Pennsylvania
    February 9, 2001

                                      F-2
<PAGE>
                        ICT GROUP, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

                                                                                                    December 31,
                                                                                        -----------------------------------
                                       ASSETS                                               2000                    1999
                                                                                        -------------            ----------

<S>                                                                                           <C>                    <C>
CURRENT ASSETS:
    Cash and cash equivalents                                                         $     8,539,170        $    12,239,021
    Accounts receivable, net of allowance for doubtful accounts
       of $684,103 and $804,588                                                            42,411,274             28,796,353
    Prepaid expenses and other                                                              3,073,430              2,599,418
    Deferred income taxes                                                                     306,943                556,456
                                                                                      ---------------        ---------------

              Total current assets                                                         54,330,817             44,191,248

PROPERTY AND EQUIPMENT, net                                                                36,160,410             29,420,635

DEFERRED INCOME TAXES                                                                       1,689,056              2,858,145

OTHER ASSETS                                                                                1,556,999              1,602,721
                                                                                      ---------------        ---------------

                                                                                      $    93,737,282        $    78,072,749
                                                                                      ===============        ===============

                        LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
    Line of credit                                                                    $     8,500,000        $            --
    Current portion of long-term debt                                                       4,000,000              4,000,000
    Current portion of capitalized lease obligations                                          291,918                524,642
    Accounts payable                                                                       10,433,489              7,868,817
    Accrued expenses                                                                        7,828,638              5,031,018
                                                                                      ---------------        ---------------

              Total current liabilities                                                    31,054,045             17,424,477
                                                                                      ---------------        ---------------

LONG-TERM DEBT                                                                              6,000,000             10,000,000
                                                                                      ---------------        ---------------

CAPITALIZED LEASE OBLIGATIONS                                                                      --                308,289
                                                                                      ---------------        ---------------

COMMITMENTS AND CONTINGENCIES (Note 7)

SHAREHOLDERS' EQUITY:
    Preferred stock, $.01 par value, 5,000,000 shares authorized,
      none issued                                                                                 --                     --
    Common stock, $.01 par value, 40,000,000 shares authorized, 12,073,550 and
      11,810,025 shares issued and outstanding                                                120,736                118,100
    Additional paid-in capital                                                             49,797,414             49,402,416
    Retained earnings                                                                       8,283,211              1,554,005
    Accumulated other comprehensive loss                                                   (1,518,124)              (734,538)
                                                                                      ---------------        ---------------

              Total shareholders' equity                                                   56,683,237             50,339,983
                                                                                      ---------------        ---------------

                                                                                      $    93,737,282        $    78,072,749
                                                                                      ===============        ===============
</TABLE>
                                      F-3

        The accompanying notes are an integral part of these statements.

<PAGE>
                        ICT GROUP, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
                                                                              For the Year Ended
                                                                                December 31,
                                                              --------------------------------------------------
                                                                    2000              1999             1998
                                                              ---------------   ---------------  ---------------

<S>                                                           <C>               <C>              <C>
NET REVENUES                                                   $198,609,414     $153,049,467     $   120,981,890
                                                               ------------     ------------     ---------------
OPERATING EXPENSES:
    Cost of services                                            111,545,354       84,390,236          69,587,985
    Selling, general and administrative                          74,825,658       60,079,796          47,011,939
                                                               ------------     ------------     ---------------
                                                                186,371,012      144,470,032         116,599,924
                                                               ------------     ------------     ----------------
           Operating income                                      12,238,402        8,579,435           4,381,966
INTEREST EXPENSE                                                  1,674,088        1,261,652           1,019,511
INTEREST INCOME                                                    (467,171)        (460,684)           (613,682)
                                                               ------------     ------------     ---------------


           Income before income taxes                            11,031,485        7,778,467           3,976,137

INCOME TAXES                                                      4,302,279        3,033,462           1,549,309
                                                              -------------     ------------     ---------------

NET INCOME                                                    $   6,729,206     $  4,745,005     $     2,426,828
                                                              =============     ============     ===============

EARNINGS PER SHARE:
     Basic earnings per share                                 $        0.56     $       0.40     $          0.21
                                                              =============     ============     ===============

     Diluted earnings per share                               $        0.54     $       0.39     $          0.20
                                                              =============     ============     ===============

     Shares used in computing basic earnings
        per share                                                11,922,671       11,748,776          11,569,931
                                                              =============     ============     ===============
     Shares used in computing diluted earnings
        per share                                                12,454,151       12,261,075          12,023,152
                                                              =============     ============     ===============
</TABLE>

        The accompanying notes are an integral part of these statements.

                                       F-4

<PAGE>
                        ICT GROUP, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                                                         Accumulated
                                              Common Stock       Additional    Deferred    Retained       Other Comp-     Total
                                          --------------------    Paid-in      Compen-     Earnings       rehensive    Shareholders'
                                           Shares      Amount     Capital      sation      (Deficit)     Income (loss)     Equity
                                          ---------    -------   ----------   ----------  ------------   -------------  -----------
<S>                                         <C>          <C>        <C>           <C>         <C>           <C>            <C>
BALANCE, DECEMBER 31, 1997               11,542,300   $115,423   $49,257,879   $(107,428)  $(5,617,828)  $  (279,847)   $43,368,199
  Amortization of deferred compensation        --         --            --        53,712          --            --           53,712
  Exercise of stock options                 100,175      1,002        76,251        --            --            --           77,253
                                                                                                                        -----------
  Comprehensive income:
     Net income                                --         --            --          --       2,426,828          --        2,426,828
     Currency translation adjustment           --         --            --          --            --        (140,907)      (140,907)
                                                                                                                        -----------
           Total comprehensive income                                                                                     2,285,921
                                         ----------   --------   -----------   ---------   -----------   -----------    -----------
BALANCE, DECEMBER 31, 1998               11,642,475    116,425    49,334,130     (53,716)   (3,191,000)     (420,754)    45,785,085
  Amortization of deferred compensation        --         --            --        53,716          --            --           53,716
  Exercise of stock options                 167,550      1,675        68,286        --            --            --           69,961
                                                                                                                        -----------
  Comprehensive income:
     Net income                                --         --            --          --       4,745,005          --        4,745,005
     Currency translation adjustment           --         --            --          --            --        (313,784)      (313,784)
                                                                                                                        -----------
           Total comprehensive income                                                                                     4,431,221
                                         ----------   --------   -----------   ---------   -----------   -----------    -----------
BALANCE, DECEMBER 31, 1999               11,810,025    118,100    49,402,416        --       1,554,005      (734,538)    50,339,983
 Exercise of stock options                  263,525      2,636       394,998        --             --            --         397,634
                                                                                                                        -----------
 Comprehensive income:
    Net income                                 --         --            --          --       6,729,206          --        6,729,206
    Currency translation adjustment            --         --            --          --            --        (783,586)      (783,586)
                                                                                                                        -----------
          Total comprehensive income           --         --            --          --            --            --        5,945,620
                                         ----------   --------   -----------   ---------   -----------   -----------    -----------
BALANCE, DECEMBER 31, 2000               12,073,550   $120,736   $49,797,414   $    --     $ 8,283,211   $(1,518,124)   $56,683,237
                                         ==========   ========   ===========   =========   ===========   ===========    ===========
</TABLE>


        The accompanying notes are an integral part of these statements.

                                      F-5
<PAGE>

                        ICT GROUP, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>

                                                                   For the Year Ended December 31,
                                                            --------------------------------------------
                                                                2000            1999            1998
                                                            ------------    ------------    ------------
<S>                                                             <C>               <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income                                              $  6,729,206    $  4,745,005    $  2,426,828
    Adjustments to reconcile net income to
       net cash provided by operating activities-
         Depreciation and amortization                         9,621,025       8,003,889       5,667,166
         Deferred income tax expense (benefit)                 1,418,602         (64,583)        143,857

         (Increase) decrease in-
           Accounts receivable                               (13,614,921)     (2,452,672)     (8,659,610)
           Prepaid expenses and other                           (474,012)     (1,041,503)        309,612
           Other assets                                          (44,161)         42,587        (406,491)
         Increase (decrease) in-
           Accounts payable                                    2,564,672         984,738       1,061,441
           Accrued expenses                                    2,797,620       1,322,282        (250,466)
                                                            ------------    ------------    ------------
                Net cash provided by operating activities      8,998,031      11,539,743         292,337
                                                            ------------    ------------    ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchases of property and equipment                      (16,270,917)     (8,646,665)    (14,755,145)
                                                            ------------    ------------    ------------
                Net cash used in investing activities        (16,270,917)     (8,646,665)    (14,755,145)
                                                            ------------    ------------    ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
    Net borrowings under line of credit                        8,500,000            --              --
    Proceeds from long-term debt                                    --              --        12,161,222
    Payments on long-term debt                                (4,000,000)     (4,000,000)       (346,202)
    Payments on capitalized lease obligations                   (541,013)       (665,487)       (744,333)
    Proceeds from exercise of stock options                      397,634          69,961          77,253
                                                            ------------    ------------    ------------
                Net cash provided by (used in) financing
                   activities                                  4,356,621      (4,595,526)     11,147,940
                                                            ------------    ------------    ------------
EFFECT OF FOREIGN EXCHANGE RATE CHANGES
   ON CASH AND CASH EQUIVALENTS                                 (783,586)       (313,784)       (140,907)
                                                            ------------    ------------    ------------
NET DECREASE IN CASH AND
   CASH EQUIVALENTS                                           (3,699,851)     (2,016,232)     (3,455,775)

CASH AND CASH EQUIVALENTS, BEGINNING
   OF YEAR                                                    12,239,021      14,255,253      17,711,028
                                                            ------------    ------------    ------------
CASH AND CASH EQUIVALENTS, END OF YEAR                      $  8,539,170    $ 12,239,021    $ 14,255,253
                                                            ============    ============    ============
</TABLE>

        The accompanying notes are an integral part of these statements.

                                      F-6
<PAGE>
                        ICT GROUP, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



1. BACKGROUND:

ICT Group, Inc. (incorporated in the state of Pennsylvania in 1987) and
subsidiaries (the "Company") is a global supplier of Customer Relationship
Management (CRM) services - consisting of integrated telesolutions, e-solutions
and market solutions - which help its clients identify, acquire, retain,
service, measure and maximize the lifetime value of their customer
relationships. The Company manages 42 customer contact centers in the U.S.,
Europe, Canada and Australia from which it supports outbound and inbound
telesales, customer management services, Web-enabled center services, and e-mail
management, for domestic and multinational corporations and institutions,
primarily in the insurance, financial, telecommunications/energy services,
pharmaceutical and healthcare, and information technology industries.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Principles of Consolidation

The consolidated financial statements include the accounts of ICT Group, Inc.
and its subsidiaries. All material intercompany balances and transactions have
been eliminated.

Pursuant to Statement of Financial Accounting Standards ("SFAS") No. 52,
substantially all assets and liabilities of the Company's foreign subsidiaries
are translated at the period-end currency exchange rate and revenues and
expenses are translated at an average currency exchange rate for the period. The
resulting translation adjustment is accumulated in a separate component of
shareholders' equity.

Use of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

Revenue Recognition

The Company recognizes revenues as services are performed, generally based on
hours of work incurred. Amounts collected from customers prior to the
performance of services are recorded as deferred revenues. Deferred revenues
were not material as of December 31, 2000 and 1999.

Cash and Cash Equivalents

Cash and cash equivalents include cash and highly liquid investments purchased
with an original maturity of three months or less. Cash equivalents at December
31, 2000 consist of an overnight repurchase agreement, money market accounts and
investment-grade commercial paper.



                                      F-7
<PAGE>
Property and Equipment

<TABLE>
<CAPTION>
                                                                      December 31,
                                                             ------------------------------
                                                                  2000              1999
                                                             --------------   -------------

         <S>                                                     <C>                <C>
       Communications and computer equipment                 $54,023,505        $41,969,697
       Furniture and fixtures                                 11,837,556          9,556,467
       Leasehold improvements                                  6,614,403          4,678,383
                                                             -----------        -----------
                                                              72,475,464         56,204,547
       Less -  Accumulated depreciation and
                   amortization                              (36,315,054)       (26,783,912)
                                                             ------------       -----------
                                                             $36,160,410        $29,420,635
                                                             ===========        ===========
</TABLE>

Property and equipment are recorded at cost. Depreciation and amortization are
provided over the estimated useful lives of the applicable assets using the
straight-line method. The lives used are as follows:

        Communications and computer equipment    3-5 years
        Furniture and fixtures                   5-7 years
        Leasehold improvements                   Lease term

Depreciation expense was $9,531,142, $7,860,290 and $5,564,496 for the years
ended December 31, 2000, 1999 and 1998, respectively. Repairs and maintenance
are charged to expense as incurred. Additions and betterments are capitalized.

Equipment under capital leases included in property and equipment is $5,946,468,
with related accumulated amortization of $5,527,971 and $5,072,021 at December
31, 2000 and 1999, respectively.

Other Assets
<TABLE>
<CAPTION>
                                                                                    December 31,
                                                                         ---------------------------------
                                                                              2000                1999
                                                                         -------------      --------------
         <S>                                                                    <C>                <C>
        Deposits                                                         $     913,645      $     866,021
        Goodwill, net of accumulated amortization of $338,914
           and $278,427                                                        569,021            629,508
        Other                                                                   74,333            107,192
                                                                         -------------      -------------

                                                                         $   1,556,999      $   1,602,721
                                                                         =============      =============
</TABLE>




Goodwill is amortized over 15 years on a straight-line basis and amortization
expense was $60,487 for the years ended December 31, 2000, 1999 and 1998.

Long-Lived Assets

The Company continually evaluates whether events or circumstances have occurred
that would indicate that the remaining estimated useful life of long-lived
assets may warrant revision or that the remaining balance may not be
recoverable. When factors indicate that long-lived assets should be evaluated
for possible impairment, the Company uses an estimate of the related
undiscounted cash flows over the remaining life of the long-lived assets to
measure recoverability. If impairment exists, measurement of the impairment will
be based on generally accepted valuation methodologies. No such impairments were
recognized in any of the periods presented.


                                      F-8
<PAGE>


Accrued Expenses
<TABLE>
<CAPTION>
                                                                           December 31,
                                                                  -----------------------------
                                                                       2000             1999
                                                                  -------------    ------------

       <S>                                                               <C>             <C>
       Payroll and related benefits                               $   5,160,236   $   2,977,313
       Telecommunications expense                                       559,289         900,192
       Income taxes payable                                            1,184,842             --
       Interest                                                         220,157          24,500
       Other                                                            704,114       1,129,013
                                                                  -------------   -------------

                                                                  $   7,828,638   $   5,031,018
                                                                  =============   =============
</TABLE>

Income Taxes

Deferred income tax assets and liabilities are determined based on differences
between the financial reporting and income tax bases of assets and liabilities
measured using enacted income tax rates and laws that are expected to be in
effect when the differences reverse. (See Note 4).

Supplemental Cash Flow Information

For the years ended December 31, 2000, 1999 and 1998, the Company paid interest
of $1,479,031, $1,562,798, and $763,473, respectively. For the years ended
December 31, 2000, 1999 and 1998, the Company paid income taxes of $1,683,327,
$3,529,584 and $1,968,387, respectively.

Major Customers and Concentration of Credit Risk

In 2000, 1999 and 1998, one customer accounted for approximately 19%, 17% and
22% of net revenues, respectively. In 2000, 1999 and 1998, net revenues from
customers within the insurance industry accounted for 33%, 35% and 34% of total
net revenues, respectively, and customers within the financial services industry
accounted for 31%, 30% and 33% of total net revenues, respectively. The loss of
the Company's major customers or a downturn in the insurance or financial
services industries could have a material adverse effect on the Company's
business.

Concentration of credit risk is limited to trade receivables and is subject to
the financial conditions of certain major customers. The Company generally does
not require collateral from its customers.

Earnings Per Share

Basic earnings per share ("Basic EPS") is computed by dividing the net income
for each year by the weighted average number of shares of Common Stock
outstanding for each year. Diluted earnings per share ("Diluted EPS") is
computed by dividing net income for each year by the weighted average number of
shares of Common Stock and the dilutive effect of Common Stock equivalents
during each year. For the years ended December 31, 2000, 1999 and 1998, the
dilutive effect of Common Stock equivalents used in computing Diluted EPS was
531,480, 512,299 and 453,221, respectively. For the years ended December 31,
2000, 1999 and 1998, options to purchase 365,875, 68,500 and 782,429 shares of
Common Stock, respectively, were outstanding but not included in the computation
of Diluted EPS as the result would be antidilutive.

                                      F-9
<PAGE>

Comprehensive Income (Loss)

The Company follows SFAS No. 130, "Reporting Comprehensive Income". This
statement requires companies to classify items of other comprehensive income by
their nature in a financial statement and display the accumulated balance of
other comprehensive income (loss) separately from retained earnings and
additional paid-in capital in the equity section of the balance sheet.

Recent Accounting Pronouncements

         In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No.
133, as amended by SFAS No. 137, "Accounting for Derivative Instruments and
Hedging Activities-Deferral of the Effective Date of FASB Statement No. 133 an
amendment of FASB Statement No. 133", which must be adopted by the Company on
January 1, 2001, provides a comprehensive and consistent standard for the
recognition and measurement of derivatives and hedging activities. The Company
does not currently hold derivative instruments or engage in hedging activities,
and as such, the adoption of this pronouncement will not have any impact on the
Company's financial position or results of operations when adopted.

         In December 1999, the U.S. Securities and Exchange Commission issued
Staff Accounting Bulletin No. 101 ("SAB 101"). This pronouncement provides the
staff's views in applying generally accepted accounting principles to selected
revenue recognition issues. Accordingly, guidance is provided with respect to
the recognition, presentation and disclosure of revenue in the financial
statements. Adoption of SAB 101, as amended by SAB Nos. 101A and 101B, was to be
effective in the fourth quarter of 2000. The adoption had no effect on the
Company's financial condition or results of operations.

 3. DEBT:
<TABLE>
<CAPTION>
                                                                                  December 31,
                                                                       --------------------------------
                                                                             2000              1999
                                                                       ---------------   --------------
         <S>                                                                    <C>               <C>
     Line of credit                                                    $    8,500,000    $          --
                                                                       --------------    --------------
     Term loan, interest at 7%, principal payments of
        $333,333 per month through June 2003                               10,000,000        14,000,000
                                                                       --------------    --------------
     Less - Current portion                                                (4,000,000)       (4,000,000)
                                                                       --------------    --------------
                                                                       $    6,000,000    $   10,000,000
                                                                       ==============    ==============
</TABLE>

Future maturities of long-term debt are as follows at December 31, 2000:



                  2001               $   4,000,000
                  2002                   4,000,000
                  2003                   2,000,000
                                     -------------
                                     $  10,000,000
                                     =============

In April 1998, the Company entered into an agreement with two banks under which
the Company obtained a Line of Credit for an aggregate of $45.0 million (the
"Line of Credit"). Upon execution of the agreement, all principal amounts
outstanding under prior agreements, plus accrued interest and fees incurred in
connection with the new agreement, were rolled into the Line of Credit. This
agreement was amended in December 1998 to allow for an annual calendar year term
out. Borrowings may be used for acquisitions, working capital, capital
expenditures and other corporate purposes. The Line of Credit can be drawn upon
through July 2001, at which time all amounts outstanding are repayable, unless
the Company has elected to term out eligible borrowings as described below.
Borrowings totaling $8,500,000 made during 2000 are classified as current since
the existing agreement expires in July 2001. It is the Company's intent to
negotiate a new credit agreement and repay this amount under that new agreement.
Interest on borrowings is calculated at either prime less 0.75%, or Libor plus
1.5%, at the option of the Company and payable quarterly.

Under the terms of the amended agreement, the Company has the option, once each
year, to convert amounts borrowed for capital expenditures to term loans.
Amounts converted to term loans are repayable monthly in fifty-four equal
principal payments plus interest. Interest on the term loans is variable at a
base rate, as defined, minus 0.5%. The Company may elect to convert such


                                      F-10
<PAGE>
variable rate to a fixed rate, as defined, plus 1.50%. In December 1998, the
Company elected to convert $18,000,000 of borrowings under the Line of Credit
into a term loan. The term loan is repayable in 54 monthly installments of
$333,333 plus interest at a fixed rate of 7%, commencing January 1999.
Repayments of termed out amounts permanently reduce the amount available to
borrow under the Line of Credit. The amount of the unused Line of Credit at
December 31, 2000 totaled $18,500,000.

The Company must pay a quarterly commitment fee of .25% on the average daily
balance of any unused amount of the Line of Credit. The Company incurred
interest expense of $768,338, $0 and $650,908 under the Line of Credit for the
years ended December 31, 2000, 1999 and 1998 respectively. The weighted average
interest rate on borrowings under the Line of Credit for the years ended
December 31, 2000 and 1998 was 8.4% and 7.4%, respectively.

Borrowings under the Line of Credit are secured by substantially all of the
Company's assets. The Company is required to maintain certain financial ratios
and a specified level of net worth, as defined, and payments of dividends and
repurchases of stock are limited. As of December 31, 2000, the Company was in
compliance with the terms of the Line of Credit.

4. INCOME TAXES:

The components of the income before income taxes are as follows:
<TABLE>
<CAPTION>

                                                                  Year Ended December 31,
                                               ----------------------------------------------------------
                                                     2000                 1999                  1998
                                               ---------------      ---------------       ---------------
<S>                                            <C>                  <C>                   <C>
      Domestic                                 $     8,022,414      $     7,519,791       $     4,038,383
      Foreign                                        3,009,071              258,676               (62,246)
                                               ---------------      ---------------       ---------------
                                               $    11,031,485      $     7,778,467       $     3,976,137
                                               ===============      ===============       ===============
</TABLE>

The components of the income tax provision are as follows:
<TABLE>
<CAPTION>
                                                                   Year Ended December 31,
                                                 --------------------------------------------------------
                                                       2000                1999                  1998
                                                 --------------      --------------        --------------
        <S>                                                <C>              <C>                  <C>
      Current:
        Federal                                  $    1,611,557      $    2,680,365        $    1,271,126
        State                                           160,000                  --                 9,746
        Foreign                                       1,112,120             417,680               124,580
                                                 --------------      --------------        --------------

                                                      2,883,677           3,098,045             1,405,452
                                                 --------------      --------------        --------------
      Deferred:
        Federal                                       1,605,002             123,445               121,725
        State                                                --             (38,548)               22,132
        Foreign                                        (186,400)           (149,480)                --
                                                 -----------------   -----------------     --------------

                                                      1,418,602             (64,583)              143,857
                                                 --------------      ---------------       --------------

                                                 $    4,302,279      $    3,033,462        $    1,549,309
                                                 ==============      ==============        ==============
</TABLE>

                                      F-11
<PAGE>


The approximate income tax effect of each type of temporary difference is as
follows:

<TABLE>
<CAPTION>
                                                                                     December 31,
                                                                          --------------------------------
                                                                                2000             1999
                                                                          --------------   ---------------
                <S>                                                              <C>               <C>
           Deferred tax assets:
             Nonrecurring compensation expense                            $    2,487,958   $    3,526,358
             Accruals and reserves not currently
                deductible for tax                                               306,943          556,456
             Other                                                               380,434          192,034
                                                                          --------------   --------------
                                                                          $    3,175,335   $    4,274,848
                                                                          ==============   ==============
           Deferred tax liabilities:
             Depreciation methods                                               (666,630)        (755,433)
             Other                                                              (512,706)        (104,814)
                                                                          ---------------  ---------------
                                                                          $   (1,179,336)  $     (860,247)
                                                                          ===============  ===============
</TABLE>

The Company has recorded no valuation reserve for deferred tax assets as of
December 31, 2000. Although realization is not assured, management believes it
is more likely than not that all of the deferred tax assets will be realized.
The amount of the deferred tax asset considered realizable, however, could be
reduced in the near-term if estimates of future taxable income are reduced.

In June 1996, the Company recorded a nonrecurring compensation charge of $12.7
million relating to the extension of stock options. In connection with the
compensation charge, the Company recorded a deferred tax benefit of $4.7 million
based on the then excess of the Company's stock price ($16 per share) over the
exercise price of the extended options. To the extent the stock price is below
$16 per share when the options are exercised, the actual tax deduction the
Company will receive will be less than the carrying amount of the deferred tax
asset. Based on the Company's stock price at December 31, 2000 of $9.625 per
share, an impairment of $1.0 million would have occurred had all of the extended
options been exercised. To the extent non-extended options are exercised that
result in a tax deduction the potential impairment of the deferred tax asset
would be reduced.

The reconciliation of the statutory federal income tax rate to the Company's
effective income tax rate is as follows:
<TABLE>
<CAPTION>
                                                                           Year Ended December 31,
                                                                 ------------------------------------------
                                                                     2000            1999              1998
                                                                     ----            ----              ----
  <S>                                                                  <C>             <C>               <C>
  Federal statutory tax rate                                         34.0%           34.0%             34.0%
  State income taxes, net of federal tax benefit                       1.0             0.2               1.3
  Other                                                                4.0             4.8               3.7
                                                                 ---------       ---------          --------
                                                                     39.0%           39.0%             39.0%
                                                                 =========       =========          ========
</TABLE>
                                      F-12
<PAGE>
5. PROFIT SHARING PLAN:

The Company maintains a trusteed profit sharing plan (Section 401(k)) for all
qualified employees, as defined. The Company matches 50% of employee
contributions, up to a maximum of 6% of the employee's compensation; however, it
may also make additional contributions to the Plan based upon profit levels and
other factors. No such additional contributions were made in 2000, 1999 or 1998.
Employees are fully vested in their contributions, while full vesting for the
Company's contributions occurs upon death, disability, retirement or completion
of five years of service. In 2000, 1999 and 1998, the Company's contributions
were $562,806, $446,050 and $323,060, respectively. The Plan's trustees are the
management of the Company.

In 1999, the Company adopted a Non-Qualified Deferred Compensation Plan for
certain employees and deferrals commenced in April 2000. This plan allows
certain employees to defer a portion of their compensation on a pre-tax basis.
Employees are fully vested in their deferred amounts, but withdrawals are not
permitted until the plan is terminated, the employee attains age 65, or the
employee terminates, becomes disabled, or dies. Other withdrawals are permitted
for unforeseeable emergencies only. Effective January 1, 2001, the Company will
match 10% of employee deferrals, up to certain limits with vesting of Company
matching contributions occurring ratably over three years. There was no Company
match in 2000.


6. EQUITY PLANS:

Stock Option Plans

The Company's 1996 Equity Compensation Plan authorizes up to 1,620,000 shares of
Common Stock for issuance in connection with the granting to employees and
consultants of incentive and nonqualified stock options, restricted stock, stock
appreciation rights and other awards based on the Company's Common Stock. The
options to be granted and the option prices are established by the Board of
Directors or a committee composed of two or more of its members. Incentive stock
options are granted at prices not less than fair market value. Options are
exercisable for periods not to exceed ten years, as determined by the Board of
Directors or its committee and generally vest over a 3 year period. As of
December 31, 2000, 654,400 shares of Common Stock were available for grant under
the plan.

The Company's 1996 Non-Employee Director Plan authorizes up to 50,000 shares of
Common Stock for issuances of nonqualified stock options to non-employee
directors. As of December 31, 2000, 20,000 shares of Common Stock are available
for grant under this plan.

In connection with the Company's 1987 Stock Option Plan options to purchase
1,530,000 shares of Common Stock were authorized for issuance. No future grants
will be made under this plan.

Equity Incentive Plan

In December 1995, the Company adopted an Equity Incentive Plan that provided for
the issuance of up to 270,000 Equity Incentive Units ("Units"). In December
1995, the Company awarded 159,300 Units with a purchase price of $1.02 per Unit.
Each Unit allows the holder the right to purchase one share of Common Stock at a
specified price. Units are exercisable for a period not to exceed ten years from
the date of grant. As of December 31, 2000, there were 74,475 Units outstanding.
No more Units will be granted under the Equity Incentive Plan.

iCT ConnectedTouch Equity Incentive Plan

         The Company formed iCT ConnectedTouch LLC ("ConnectedTouch") in
February 2000 as a Pennsylvania limited liability company. ConnectedTouch is a
wholly owned subsidiary of the Company engaged in the business of providing
customer relationship management software and technology hosting services as an
application service provider to in-house operations and to provide related
consulting services. The Company owns 10,000,000 interests in ConnectedTouch,
consisting of all the issued and outstanding interests in ConnectedTouch. The
ownership of an "interest" in a Pennsylvania limited liability company is
similar to the ownership of a share of common stock in a corporate entity.


                                      F-13
<PAGE>


         In May 2000, ConnectedTouch adopted a 2000 Equity Compensation Plan
(the "Plan") pursuant to which ConnectedTouch reserved for issuance options to
purchase up to 2,000,000 interests in ConnectedTouch. The Plan permits the
issuance of these options to employees of the Company or ConnectedTouch and to
members of the Board of Directors of the Company and ConnectedTouch.

         On October 19, 2000 ConnectedTouch issued options to purchase 961,000
interests under the Plan to sixty-seven (67) individuals consisting of employees
of the Company and ConnectedTouch and each member of the Company's Board of
Directors. These options were issued at an exercise price of $.30 per interest,
the fair market value of the interests at the time of grant as determined by an
independent financial advisor retained by the Company. These interests become
exercisable only if ConnectedTouch completes an initial public offering of its
stock within ten years after the date of grant. If ConnectedTouch does
complete such a public offering, the options vest and become exercisable in full
at such time. The respective rights and obligations of the option holders,
including without limitation, such matters as the termination of the options
upon the termination of the option holder's employment or upon the occurrence of
a change of control or other corporate event affecting ConnectedTouch, are set
forth in the Plan and in the option agreements between such individuals and
ConnectedTouch.

Information with respect to the options granted under the stock option plans and
Units is as follows:

<TABLE>
<CAPTION>
                                                                                                    Weighted
                                                                               Exercise         Average Exercise
                                                           Shares                Price                Price
                                                    ------------------    ----------------      ----------------
<S>                                                      <C>                     <C>                   <C>
    Outstanding, December 31, 1997                      1,120,525         $   .04 - 16.25          $    1.55
           Granted                                        235,200             4.75 - 4.88               4.87
           Exercised                                     (100,175)             .04 - 1.57                .77
           Canceled                                       (19,900)            1.57 - 4.88               3.08
                                                    -------------         ----------------         ---------
    Outstanding, December 31, 1998                      1,235,650             .04 - 16.25               2.22
             Granted                                      300,800            3.40 - 11.00               3.91
             Exercised                                   (167,550)            .04 -  4.75                .45
             Canceled                                     (40,475)           1.02 - 16.00               6.30
                                                    -------------         ---------------          ---------
    Outstanding, December 31, 1999                      1,328,425             .04 - 16.25               2.71
             Granted                                      430,400            6.00 - 11.94               9.90
             Exercised                                   (263,525)            .04 - 10.00               1.51
             Canceled                                    (113,400)           1.02 - 16.00               8.33
                                                    -------------         ---------------          ---------
    Outstanding, December 31, 2000                      1,381,900         $   .04 - 16.25          $    4.69
                                                    =============         ===============          ---------
</TABLE>

The following table summarizes information about stock options and units
outstanding at December 31, 2000:

<TABLE>
<CAPTION>
                                          Options Outstanding                             Options Exercisable
                               ---------------------------------------------       --------------------------------
                                                 Weighted          Weighted                             Weighted
                                                  Average           Average                              Average
            Range of                Number       Remaining         Exercise              Number         Exercise
         Exercise Price          Outstanding       Life              Price            Exercisable         Price
      -------------------      ---------------  -----------       ----------       ----------------   -------------
<S>                                   <C>          <C>               <C>                 <C>                <C>
      $ .04 to   $1.62             470,900           3            $     .31              470,900       $     .31
      $1.63 to   $4.87             408,800           8                 4.12              239,000            4.29
      $4.88 to   $9.75             272,000           9                 7.55               89,775            6.51
      $9.76 to  $16.25             230,200           9                11.30               66,250           12.31
                             -------------    ---------------    ------------     --------------    ---------------
      $ .04 to  $16.25           1,381,900           7            $    4.69              865,925       $    2.97
                             =============    ===============    ============     ==============    ===============
</TABLE>


                                      F-14
<PAGE>

Company Option Plans

The Company applies Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees," and the related interpretations in accounting for
its stock option plans. The Company follows the disclosure requirement of SFAS
No. 123, "Accounting for Stock-Based Compensation". Had compensation cost for
the Company's stock-based compensation plans been determined under SFAS No. 123,
the Company's net income and earnings per share would have been decreased to the
following pro forma amounts:



                                              Year Ended December 31,
                                 -----------------------------------------------
                                      2000            1999               1998
                                 ------------     ------------      ------------

  Net income, as reported        $  6,729,206     $  4,745,005      $  2,426,828
  Pro forma net income           $  6,136,307     $  4,131,810      $  2,175,662

  Diluted EPS, as reported       $       0.54     $       0.39      $       0.20
  Pro forma Diluted EPS          $       0.49     $       0.34      $       0.18

The weighted average fair value of the options granted in 2000, 1999 and 1998 is
estimated at $4.24, $2.05 and $2.12 per share, respectively, on the date of
grant using the Black-Scholes option pricing model with the following
assumptions: no expected dividend yield, volatility of 85%, weighted average
risk-free interest rate of 7% in 2000, 5% in 1999 and 5% in 1998, and an
expected life of two years in 2000, 1999 and 1998.

7. COMMITMENTS AND CONTINGENCIES:

The Company leases office facilities and certain equipment under operating
leases. Rent expense was $13,006,831, $9,716,388 and $7,087,136 for the years
ended December 31, 2000, 1999 and 1998, respectively. As of December 31, 2000,
future minimum rentals for all operating leases are as follows:

             2001                          $ 16,038,661
             2002                            14,388,154
             2003                            12,866,270
             2004                            10,412,293
             2005                             7,015,889
             2006 and thereafter             13,916,894


The Company leases certain equipment under capital leases which expire in 2001.

The Company enters into agreements with its telephone long-distance carriers
ranging from one to three years, which provide for, among other things, annual
minimum purchases and termination penalties.

In January 2001, the Company signed a lease for a new corporate headquarters
facility. The lease is scheduled to commence in February 2002, is for
approximately 105,000 square feet, and has a term of 15 years. Minimum annual
rent in the first year of the lease is $2,325,600 and increases by 2% per year
throughout the lease term.

From time to time, the Company is involved in certain legal actions arising in
the ordinary course of business. In management's opinion, the outcome of such
actions will not have a material adverse effect on the Company's financial
position or results of operations.

In October 1997, a shareholder, purporting to act on behalf of a class of ICT
shareholders filed a complaint in the United States District Court for the
Eastern District of Pennsylvania against the Company and certain of its
directors. The complaint alleges that the defendants violated the federal
securities laws, and seeks compensatory and other damages, including rescission
of stock purchases made by the plaintiff and other class members in connection
with the Company's initial public offering in June 1996. The defendants believe
the complaint is without merit, deny all of the allegations of wrong doing and
are vigorously defending the suit. In February 1998, the defendants filed a
motion to dismiss the complaint. In May 1998, the complaint was dismissed by a
judge for the United States District Court for the Eastern District of
Pennsylvania with leave to plaintiff to file an amended complaint on narrow
accounting allegations. In June 1998, plaintiffs filed a First Amended Class
Action Complaint purporting to


                                      F-15
<PAGE>

bring negligence claims in connection with the Company's initial public
offering. The defendants continue to deny all allegations of wrongdoing, believe
the amended complaint is without merit and are vigorously defending the suit. In
November 1998, the court granted a motion appointing Rowan Klein and Michael
Mandat as lead plaintiffs. In February 1999, the court dismissed the case
without prejudice, directing that the case remain in status quo, that the
statute of limitations be tolled and that the parties continue with discovery
and advise the court if assistance by the court is needed. Since that time the
defendants filed a motion for summary judgement seeking to have the case
dismissed on the grounds that there is no material issue of fact. Plaintiffs
filed a response in opposition to defendant's motion and also filed a motion to
have the matter certified as a class action. In September 2000, the Court
entered orders dismissing the defendants motion for summary judgement and
plaintiffs motion for class certification without prejudice, with leave to
re-file such motions upon the completion upon discovery. The Company anticipates
that further discovery will be conducted.

In July 1996, Main Street Marketing of America Incorporated ("Main Street
Marketing") brought a demand for arbitration against the Company claiming
damages as a result of the Company's alleged breach of a service agreement under
which the Company agreed to provide Main Street Marketing with various data
entry and data processing services relating to Main Street Marketing's magazine
subscription program. Main Street Marketing alleges that the Company committed
various breaches of the service agreement and has demanded an award in excess of
$15 million. The Company has responded to this demand for arbitration by denying
liability and counterclaiming in an amount in excess of $125,000. Discovery has
progressed in this matter, and the arbitration is expected to be completed in
August 2001. It is not possible at this stage of the proceeding to evaluate the
probable outcome of this matter.

The Company has renewable employment agreements with nine key executives with
terms ranging from one to three years. The agreements provide for, among other
things, severance payments ranging from six months to three years.


                                      F-16
<PAGE>

8. OPERATING AND GEOGRAPHIC INFORMATION:

Under the disclosure requirements of SFAS No. 131, the Company classifies its
operations into three business segments: Domestic TeleServices, International
Services, and Customer Management Services. The operating segments are managed
separately because each operating segment represents a strategic business unit
that offers different services. The accounting policies of the operating
segments are the same as described in the summary of significant accounting
policies (see Note 2). Segment assets include amounts specifically identified to
each segment. Corporate assets consist primarily of property and equipment. The
Domestic TeleServices segment provides inbound and outbound customer acquisition
services. The International Services segment provides international multilingual
inbound and outbound customer acquisition services, customer care services,
marketing, research and other value-added services and includes business
conducted by Spantel for the US Hispanic market. The Customer Management
Services segment provides marketing, research, consulting customer acquisition
primarily, and customer care services on behalf of customers operating in the
Company's target industries.

<TABLE>
<CAPTION>
                                                                         For the Year Ended December 31,
                                                       ---------------------------------------------------------------
                                                              2000                   1999                   1998
                                                       -----------------      -----------------      -----------------
                                                                                (In thousands)
<S>                                                             <C>                  <C>                      <C>
Revenues:
  Domestic TeleServices                                $          83,908      $          83,896      $          79,030
  International Services                                          52,164                 24,008                 13,373
  Customer Management Services                                    62,537                 45,145                 28,579
                                                       -----------------      -----------------      -----------------
                                                       $         198,609      $         153,049      $         120,982
                                                       =================      =================      =================
Operating income (loss):
  Domestic TeleServices                                $           3,061      $           3,958      $           5,791
  International Services                                           4,793                    (99)                (1,263)
  Customer Management Services                                     4,384                  4,720                   (146)
                                                       -----------------      -----------------      -----------------
                                                       $          12,238      $           8,579      $           4,382
                                                       =================      =================      =================
Total assets:
  Domestic TeleServices                                $          44,289      $          41,408      $          41,786
  International Services                                          28,995                 15,777                 13,356
  Customer Management Services                                    16,956                 15,853                 15,996
  Corporate                                                        3,497                  5,035                  4,738
                                                       -----------------      -----------------      -----------------
                                                       $          93,737      $          78,073      $          75,876
                                                       =================      =================      =================
Depreciation and amortization:
  Domestic TeleServices                                $           2,833      $           3,242      $           2,583
  International Services                                           2,594                  1,793                  1,005
  Customer Management Services                                     2,190                  1,602                  1,110
  Corporate                                                        2,004                  1,367                    969
                                                       -----------------      -----------------      -----------------
                                                       $           9,621      $           8,004      $           5,667
                                                       =================      =================      =================
Capital expenditures:
  Domestic TeleServices                                $           4,385      $           1,625      $           4,496
  International Services                                           5,707                  5,036                  4,046
  Customer Management Services                                     5,083                  1,444                  4,327
  Corporate                                            $           1,096                    542                  1,886
                                                       -----------------      -----------------      -----------------
                                                       $          16,271      $           8,647      $          14,755
                                                       =================      =================      =================
</TABLE>


                                      F-17
<PAGE>

The following table represents information about the Company by geographic area:


<TABLE>
<CAPTION>
                                                                         For the Year Ended December 31,
                                                       ---------------------------------------------------------------
                                                              2000                   1999                   1998
                                                       -----------------      -----------------      -----------------
                                                                                (In thousands)
<S>                                                             <C>                  <C>                      <C>
Revenues:
  United States                                        $         155,898      $         134,018      $         111,067
  Canada                                                          24,415                  9,155                  4,676
  Europe                                                          15,333                  8,391                  5,239
  Australia                                                        2,963                  1,485                     --
                                                       -----------------      -----------------      -----------------
                                                       $         198,609      $         153,049      $         120,982
                                                       =================      =================      =================

Operating income (loss):
  United States                                        $           8,967      $           9,395      $           5,655
  Canada                                                           2,974                  1,186                  1,463
  Europe                                                           1,068                 (1,650)                (2,736)
  Australia                                                         (771)                  (352)                    --
                                                       -----------------      -----------------      -----------------

                                                       $          12,238      $           8,579      $           4,382
                                                       =================      =================      =================

Total assets:
  United States                                        $          64,842      $          62,496      $          68,107
  Canada                                                          12,382                  6,388                  3,078
  Europe                                                          14,199                  8,516                  4,691
  Australia                                                        2,314                    673                     --
                                                       -----------------      -------------------    -----------------
                                                       $          93,737      $          78,073      $          75,876
                                                       =================      =================      =================
</TABLE>


9. QUARTERLY FINANCIAL DATA (unaudited)
   (in Thousands Except for per Share Data)

<TABLE>
<CAPTION>
                                                                  Quarter Ended
                                March 31,                June 30,              September 30,           December 31,
                          ----------------------- ------------------------ ----------------------- ----------------------
                             2000        1999        2000        1999        2000        1999        2000        1999
                             ----        ----        ----        ----        ----        ----        ----        ----
<S>                        <C>         <C>         <C>         <C>         <C>         <C>          <C>        <C>
Net revenues               $41,285     $36,951     $48,126     $40,236     $51,445     $37,084      $57,753    $38,779
Gross margin                17,835      16,563      21,197      18,395      21,888      16,727       26,144     16,974
Operating income             2,154       1,910       3,107       2,479       2,961       1,783        4,016      2,407
Income before
 income taxes                1,987       1,662       2,807       2,252       2,587       1,592        3,650      2,272
Net income                   1,212       1,014       1,712       1,374       1,578         971        2,227      1,386
Diluted earnings
 per share                    0.10        0.08        0.14        0.11        0.13        0.08         0.18       0.11
</TABLE>


                                      F-18
<PAGE>

ICT GROUP, INC. AND SUBSIDIARIES


                 SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS



<TABLE>
<CAPTION>
                                                     Balance,
                                                    Beginning       Charged to                             Balance,
                Description                          of Year          Expense          Deductions        End of Year
------------------------------------------      ----------------  -------------    -----------------   -------------
<S>                                                    <C>               <C>              <C>                 <C>
Allowance for doubtful accounts:
         2000                                   $     804,588     $    831,998     $   (952,483)       $    684,103
         1999                                         514,897        1,145,177         (855,486)            804,588
         1998                                         345,897          456,697         (287,697)            514,897
</TABLE>

                                      F-19