SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

                 [X] Quarterly Report Pursuant to Section 13 or
                  15(d) of the Securities Exchange Act of 1934.

                For the quarterly period ended September 30, 1998

                                       or

                  [ ] Transition Report Pursuant to Section 13
                   or 15(d) of the Securities Exchange Act of
                                      1934.

                    For the transition period _____ to ______

                         Commission File Number 1-12577

                                SITEL CORPORATION
             (Exact name of registrant as specified in its charter)

                   Minnesota                       47-0684333
          (State or jurisdiction of             (I.R.S. Employer
          incorporation or organization)       Identification No.)

                          111 SOUTH CALVERT, STE. 1900
                               BALTIMORE, MD 21202
                                 (410) 246-1505

   (Address, including zip code, and telephone number, including area code, of
                   registrant's principal executive offices)

     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

     As of October  31,1998,  the Company had 64,223,565  shares of Common Stock
outstanding.

<PAGE>
                       SITEL CORPORATION AND SUBSIDIARIES

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

           Consolidated Condensed Balance Sheets.............................. 1

           Consolidated Condensed Statements of Income (Loss)................. 2

           Consolidated Condensed Statements of Cash Flows.................... 3

           Notes to Consolidated Condensed Financial Statements............... 4


Item 2.  Management's Discussion and Analysis of Results of Operations
         and Financial Condition............................................. 16


PART II - OTHER INFORMATION

Item 5.  Other Information................................................... 24

Item 6.  Exhibits and Reports on Form 8-K.................................... 24

Signature.................................................................... 25

<PAGE>
                       SITEL CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED CONDENSED BALANCE SHEETS
                    December 31, 1997 and September 30, 1998
                    (dollars in thousands, except share data)
<TABLE>
<CAPTION>

                                     ASSETS                            December 31,  September 30,
                                                                           1997          1998
                                                                       ------------  -------------
<S>                                                                     <C>          <C>
Current assets: .....................................................                (unaudited)
     Cash and cash equivalents ......................................   $  24,285    $  22,485
     Trade accounts receivable (net of allowance for doubtful
       accounts of $5,099 and $4,483, respectively) .................     107,697      119,905
     Marketable securities ..........................................         159           --
     Prepaid expenses ...............................................       3,916        5,734
     Other assets ...................................................       9,548       11,700
     Deferred income taxes ..........................................       3,153        1,394
                                                                        ---------    ---------
                    Total current assets ............................     148,758      161,218
Property and equipment, net .........................................     120,600      117,972
Deferred income taxes ...............................................      11,114       14,167
Goodwill, net .......................................................      94,381       94,444
Other assets ........................................................      11,027       13,760
                                                                        ---------    ---------
                    Total assets ....................................   $ 385,880    $ 401,561
                                                                        =========    =========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

     Note payable - bank ............................................   $  14,376    $  27,872
     Current portion of long-term debt ..............................      10,793        3,390
     Current portion of capitalized lease obligations ...............       4,934        2,843
     Trade accounts payable .........................................      27,322       21,177
     Income taxes payable ...........................................       8,398        5,905
     Accrued compensation ...........................................      14,120       19,522
     Accrued operating expenses .....................................      22,984       24,307
     Deferred revenue and other .....................................       6,286        7,042
                                                                        ---------    ---------
                    Total current liabilities .......................     109,213      112,058
Long-term debt, excluding current portion ...........................     102,505      105,025
Capitalized lease obligations, excluding current portion ............      12,983       11,099
Deferred compensation ...............................................       1,407        1,645

Minority interest ...................................................       1,384       10,934

Stockholders' equity:
     Common stock, voting, $.001 par value 200,000,000 shares
       authorized, 63,099,597 and 64,183,659 shares issued
       and outstanding, respectively ................................          63           64
     Paid-in capital ................................................     155,326      157,895
     Accumulated other comprehensive income .........................      (6,415)      (4,349)
     Retained earnings ..............................................       9,414        7,190
                                                                        ---------    ---------
                    Total stockholders' equity ......................     158,388      160,800
                                                                        ---------    ---------
                    Total liabilities and stockholders' equity ......   $ 385,880    $ 401,561
                                                                        =========    =========
</TABLE>
     The accompanying  notes are an integral part of the consolidated  condensed
financial statements.

                                       1
<PAGE>
                       SITEL CORPORATION AND SUBSIDIARIES
               CONSOLIDATED CONDENSED STATEMENTS OF INCOME (LOSS)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                           For The Three Months Ended       For The Nine Months Ended
                                                           September 30,  September 30,    September 30,  September 30,
                                                               1997           1998             1997           1998
                                                           -------------  -------------    -------------  -------------
(in thousands, except per share data)                                                          
<S>                                                          <C>          <C>                <C>          <C>

Revenues .................................................   $ 120,248    $ 146,755          $ 349,775    $ 431,810
                                                              --------     --------           --------     --------
Operating expenses:
     Cost of services ....................................      67,913       82,636            191,376      243,041
     Selling, general and administrative
          expenses .......................................      49,471       59,045            133,013      174,813
     Restructuring expenses ..............................          --           --                 --        6,607
                                                             ---------    ---------          ---------    ---------
                    Total operating expense ..............     117,384      141,681            324,389      424,461
                                                             ---------    ---------          ---------    ---------

                   Operating income ......................       2,864        5,074             25,386        7,349
Other income (expense):
     Interest expense, net ...............................      (1,512)      (3,457)            (3,199)      (9,422)
     Other income, net ...................................         123           19                 62          188
                                                             ---------    ---------          ---------    ---------
Income (loss) before income taxes
     and minority interest ...............................       1,475        1,636             22,249       (1,885)

Income tax expense .......................................         739          836              8,377           75
Minority interest ........................................          10           13                 86         (250)
                                                             ---------    ---------          ---------    ---------

Net income (loss) from continuing operations .............         726          787             13,786       (1,710)
Extraordinary loss on refinancing of debt,
  net of taxes ...........................................          --           --                 --          514
                                                             ---------    ---------          ---------    ---------
Net income (loss) ........................................   $     726    $     787          $  13,786    $  (2,224)
                                                             =========    =========          =========    =========


Income (loss) from continuing operations
per common share:
  Basic ..................................................   $    0.01    $    0.01          $    0.22    $   (0.03)
  Diluted ................................................   $    0.01    $    0.01          $    0.20    $   (0.03)
Income (loss) per common share:
  Basic ..................................................   $    0.01    $    0.01          $    0.22    $   (0.03)
  Diluted ................................................   $    0.01    $    0.01          $    0.20    $   (0.03)
Weighted average common shares
outstanding:
  Basic ..................................................      62,484       64,081             61,336       63,752
  Diluted ................................................      69,327       70,640             68,552       63,752
</TABLE>

     The accompanying  notes are an integral part of the consolidated  condensed
financial statements.

                                       2
<PAGE>
                       SITEL CORPORATION AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                   (unaudited)
<TABLE>
<CAPTION>

                                                                           For Nine Months Ended
  (dollars in thousands)                                                September 30,  September 30,
                                                                            1997           1998
                                                                        -------------  -------------
<S>                                                                     <C>            <C>
Net income (loss) ...................................................   $  13,786      $  (2,224)
Adjustments to reconcile net income to net cash provided by
operating activities:
  Depreciation and amortization .....................................      21,117         29,261
  Extraordinary loss on refinancing of debt .........................          --            792
  Gain on marketable securities .....................................          --           (208)
  Restructuring provision ...........................................          --          5,029
  Change in assets and liabilities:
    Trade accounts receivable .......................................     (32,440)        (9,843)
    Other assets ....................................................      (6,150)        (4,037)
    Trade accounts payable ..........................................       2,750         (6,424)
    Other liabilities ...............................................       7,290          1,364
                                                                        ---------      ---------
         Net cash provided by operating activities ..................       6,353         13,710
                                                                        ---------      ---------
  Cash flows from investing activities:
     Purchases of property and equipment ............................     (62,569)       (32,456)
     Proceeds from sale-leasebacks of facilities ....................          --          9,397
     Acquisition of businesses, net of cash acquired ................     (35,017)        (2,406)
     Acquisition of minority interest ...............................          --           (628)
     Sale of marketable securities ..................................          --            257
     Changes in other assets, net ...................................        (127)          (438)
                                                                        ---------      ---------
         Net cash used in investing activities ......................     (97,713)       (26,274)
                                                                        ---------      ---------
  Cash flows from financing activities:
     Borrowings on note payable .....................................      77,060         15,504
     Repayments of note payable .....................................     (68,440)        (2,866)
     Borrowings on long-term debt ...................................      96,862        126,533
     Repayment of long-term debt and capitalized lease obligations ..     (14,913)      (135,797)
     State incentive credits received ...............................         900             --
     Capital contribution from subsidiary shareholder ...............          --          1,400
     Sale of stock of subsidiaries ..................................          --          6,541
     Common stock issued for option exercises and other .............         227             (7)
                                                                        ---------      ---------
         Net cash provided by financing activities ..................      91,696         11,308
                                                                        ---------      ---------

Effect of exchange rates on cash ....................................      (2,545)          (544)
                                                                        ---------      ---------

         Net decrease in cash .......................................      (2,209)        (1,800)
Cash and cash equivalents, beginning of period ......................      25,710         24,285
                                                                        ---------      ---------
Cash and cash equivalents, end of period ............................   $  23,501      $  22,485
                                                                        =========      =========
</TABLE>
Supplemental schedule of non-cash financing and investing activities:
The Company  issued  approximately  2,100,000 and 41,000 shares of the Company's
common stock in connection  with  acquisitions  in the first nine months of 1997
and 1998,  respectively.
The  accompanying  notes are an  integral  part of  the  consolidated  condensed
financial statements.

                                       3
<PAGE>
                       SITEL CORPORATION AND SUBSIDIARIES
               NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

1.   BASIS OF PRESENTATION:

The consolidated  condensed  balance sheet of SITEL Corporation and Subsidiaries
(the  "Company") at December 31, 1997 was obtained  from the  Company's  audited
balance sheet as of that date. All other financial  statements  contained herein
are  unaudited  and,  in the  opinion of  management,  contain  all  adjustments
necessary for a fair presentation of the financial position,  operating results,
and cash flows for the  periods  presented.  Such  adjustments  consist  only of
normal recurring items. The consolidated  condensed financial  statements should
be read in  conjunction  with the  consolidated  financial  statements and notes
thereto,  together  with  management's  discussion  and  analysis  of  financial
condition and results of  operations,  contained in the Company's  Form 10-K for
the year ended December 31, 1997.

2.   SALE OF STOCK OF SUBSIDIARIES:

During the first  quarter of 1998 the Company sold newly issued stock of certain
subsidiaries  located  in the Asia  Pacific  region  to Lend  Lease  Corporation
Limited,  Sydney, Australia and certain of its subsidiaries ("Lend Lease"). Lend
Lease paid approximately $6.6 million for a 20% interest in these  subsidiaries,
which provide outsourced call center solutions throughout the region.

Lend Lease has several  options to increase its ownership  percentage in amounts
up to a total of 49% which,  subject to meeting  certain  conditions,  expire at
various times  through on or about March 2004.  The option  exercise  prices are
intended to  approximate  fair value through  formulas tied to the  subsidiary's
revenue  levels for certain  prior  periods.  The Company  also has an option to
reacquire the original shares sold to Lend Lease at an agreed formula price from
on or about March 2000  through on or about March 2001 so long as Lend Lease has
not exercised its option to increase its ownership  percentage.  Lend Lease also
has an option to sell its shares back to the Company at an agreed  formula price
(the "put  option").  The put  option  expires  upon the  earlier  of Lend Lease
exercising its option to increase its ownership  percentage or on or about March
2001.

Operations of these  subsidiaries  are  controlled by a management  committee on
which  Lend  Lease and the  Company  have  equal  representation.  The  Company,
however,  effectively  controls the  operations  of these  subsidiaries  through
certain  dispute  resolution  processes  that are  included  in the  shareholder
agreements.  Should the Company  exercise  its  control  through  these  dispute
resolution  processes,  Lend Lease has the option to sell its shares back to the
Company at an agreed formula price which is intended to approximate fair value.

Although the purchase price paid by Lend Lease exceeds the book value of the 20%
ownership that they acquired, due to the put option the Company has included the
entire amount of the stock purchase price as minority interest. The Company will
accrete to the put option  formula  price if earnings  credited to the  minority
interest  are not  sufficient  to record the amount that would be required to be
paid to Lend Lease upon their exercise of the put option.

3.   INCOME TAXES:

The  difference  between  the  Company's  income tax  expense as reported in the
accompanying  financial  statements and that which would be calculated using the
statutory  Federal  income  tax  rate  of  34% on  income  is  primarily  due to
non-deductible business acquisition expenses and international,  state and local
income taxes.

                                       4
<PAGE>
                       SITEL CORPORATION AND SUBSIDIARIES
               NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

4.   LONG TERM DEBT AND NOTES PAYABLE:

On March 10, 1998, the Company  completed the private  placement of $100 million
of 9.25% Senior Subordinated Notes due 2006 (the "Notes"). The proceeds from the
offering were used to repay borrowings outstanding under the Company's long term
revolving  credit  facility (the "Credit  Facility"),  which was also amended on
that date.

The Notes,  which include interest payable  semiannually,  are general unsecured
obligations of the Company and will be  subordinated  in right of payment to all
existing and future  senior debt of the  Company.  The Notes are  guaranteed  by
certain of the Company's  subsidiaries and contain certain  covenants that limit
the  ability of the  Company and  certain of its  subsidiaries  to,  among other
things,  incur  additional  indebtedness,  pay  dividends or make certain  other
restricted  payments,   consummate  certain  asset  sales,  enter  into  certain
transactions  with  affiliates,  incur liens,  merge or consolidate with another
company and sell or otherwise  dispose of all or substantially all of the assets
of the Company.

The Notes are redeemable, at the Company's option, in whole or in part from time
to time on or after March 15, 2002. If redeemed during the  twelve-month  period
commencing on March 15 of the year set forth below, the redemption prices are as
follows,  plus in each case, accrued and unpaid interest thereon, if any, to the
date of redemption:

            Year                                            Percentage
            ----                                            ----------

            2002      ................................        104.625%
            2003      ................................        103.083%
            2004      ................................        101.542%
            2005 and thereafter  .....................        100.000%

In addition,  the Company may redeem up to 35% of the aggregate principal amount
of the  Notes  at any  time on or prior to  March  15,  2001 at  109.25%  of the
principal amount thereof, plus accrued interest to the date of redemption,  from
the net proceeds of one or more public equity offerings,  as defined. Also, upon
a change of control of the Company,  as defined,  the Company may be required to
repurchase the Notes at a price equal to 101% of the principal  amount  thereof,
plus accrued interest to the date of repurchase.

In connection  with the  repayment of the amounts due under the existing  Credit
Facility  from the proceeds of the Notes,  the Company also reached an agreement
with a syndicate of  commercial  banks to amend the  Company's  existing  Credit
Facility to limit borrowings under the Credit Facility to an amount based upon a
percentage of the Company's eligible domestic accounts  receivable,  as defined,
up to $75 million.  Certain of the  financial  covenants and  restrictions  were
amended and the Company's eligible domestic accounts  receivable were pledged as
security.  As a result of the amendment the Company  recognized an extraordinary
charge of $514,000,  net of tax, to write off the deferred costs of the original
Credit  Agreement.  Additionally,  in the second and third quarters of 1998, the
Company  sought and obtained  certain  modifications  to the Credit  Facility to
permit  continued  availability of borrowing under such facility.  In connection
with the modification in the third quarter the total Credit Facility was reduced
to $50 million.

5.   EMPLOYEE STOCK PURCHASE PLAN:

During the first  quarter of 1998,  the Company  implemented  an Employee  Stock
Purchase  Plan ("ESPP" or the "Plan").  The Plan enables  eligible  employees to
purchase the Company's  stock at 85% of the current  market value on a quarterly
basis.

                                       5
<PAGE>
                       SITEL CORPORATION AND SUBSIDIARIES
               NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

6.   ACCOUNTING PRONOUNCEMENT:

Statement of Financial Accounting Standard ("SFAS") 130, Reporting Comprehensive
Income  establishes  standards for the  reporting  and display of  comprehensive
income and its components in a full set of general purpose financial statements.
The standard  also  requires  disclosure  of the total of  comprehensive  income
(loss) in interim  financial  statements.  The  Company's  comprehensive  income
(loss) was $(2,226) and $3,871 for the three month periods  ended  September 30,
1997 and 1998,  respectively,  and $6,382 and $(158) for the nine month  periods
ended  September 30, 1997 and 1998,  respectively.  The  difference  between the
Company's  reported net income (loss) and comprehensive  income (loss) for those
periods is primarily due to the change in the currency exchange adjustment.  The
accumulated other  comprehensive  income included in the Company's  Consolidated
Condensed Balance Sheet at December 31, 1997 and September 30, 1998 is primarily
the accumulated currency exchange adjustment.

7.   RESTRUCTURING:

In the fourth quarter of 1997,  the Company  recorded a $15.7 million charge for
restructuring  expenses.  Included in that charge were severance and other costs
of $3.6  million,  of which $3.4 million was recorded as a liability at December
31,  1997,  as well  as  $1.1  million  of  liabilities  related  to  losses  on
contractual  obligations.  In the second quarter of 1998, the Company recorded a
$6.6 million charge for restructuring expenses primarily related to its European
operations.  Included  in that  charge  were $6.4  million  of costs  related to
termination benefits for approximately 250 employees. The restructuring expenses
also included $0.2 million for the cost of excess leased facilities.  The amount
of actual  termination  benefits  paid and actual  losses  charged  against  the
liabilities for contractual  obligations  during the nine months ended September
30, 1998 was approximately $2.9 million and $.6 million, respectively.

8.   SHAREHOLDER RIGHTS PLAN:

In August 1998, the Company's  Board of Directors  adopted a Shareholder  Rights
Plan (the "Rights  Plan") that  provides  for the  issuance of  preferred  share
purchase  rights  that  expire in August,  2008.  The rights  generally  will be
exercisable  and  transferable  apart from the common stock only after the tenth
day  following  public  disclosure  that a  person  or group  of  affiliated  or
associated  persons has acquired 20% or more of the outstanding shares of common
stock  (thereby  becoming  an  "Acquiring  Person").  The  rights  will  also be
exercisable  on  such  date as the  Board  of  Directors  determines  after  the
commencement  or announcement of a tender or exchange offer by a person or group
for 20% or more of the outstanding shares of common stock.

If any person or group of affiliated or associated  persons acquires 20% or more
of the outstanding shares of common stock and the Company's redemption right has
expired, each holder of a right (except those held by the Acquiring Person) will
have the right to purchase  shares of the Company's  common stock (or in certain
circumstances,  share of preferred  stock or similar  securities of the Company)
having  a  value  equal  to  two  times  the   exercise   price  of  the  right.
Alternatively,  if, in a transaction not approved by the Board of Directors, the
Company is acquired in a merger or other business  combination or 50% or more of
its assets or earnings  power are sold, and the Company's  redemption  right has
expired,  each holder of a right will have the right to purchase  that number of
shares of common stock of the acquiring  company  having the market value of two
times the exercise price of the right.  The rights may not be exercisable  while
they are redeemable. The rights, which have a $30 exercise price, are redeemable
by the  Company  at a price of  $.001  per  right  at any  time  until up to and
including  the 10th day after  the time  that a person  or group  has  become an
Acquiring Person.

                                       6
<PAGE>
                       SITEL CORPORATION AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

9.   SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION:

The Notes are guaranteed,  on a full, unconditional and joint and several basis,
by all wholly-owned  domestic  subsidiaries of the Company.  Separate  financial
statements of the guarantor  subsidiaries are not presented  because  management
has  determined  that they would not be  material  to  investors.  However,  the
following condensed consolidating information presents:

     (1)  Condensed  consolidating  financial statements as of December 31, 1997
          and  September  30,  1998,  and for the three and nine  months  ended,
          September 30, 1997 and 1998 of (a) SITEL Corporation,  the parent, (b)
          the guarantor subsidiaries,  (c) the nonguarantor subsidiaries and (d)
          SITEL Corporation on a consolidated basis,

     (2)  SITEL   Corporation,   the  parent,   with  the   investments  in  all
          subsidiaries  accounted  for on the equity  method,  and the guarantor
          subsidiaries with the nonguarantor  subsidiaries  accounted for on the
          equity method (one of the guarantor  subsidiaries is the parent of the
          nonguarantor subsidiaries), and

     (3)  Elimination  entries necessary to consolidate SITEL  Corporation,  the
          parent, with all subsidiaries.

                                       7
<PAGE>
                       SITEL CORPORATION AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

9.   SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION (Continued):

                                       Condensed Consolidating Balance Sheet
                                                 December 31, 1997
                                                  (in thousands)
<TABLE>
<CAPTION>
                                                               Guarantor    Nonguarantor
                                                    Parent    Subsidiaries  Subsidiaries  Eliminations  Consolidated
                                                    ------    ------------  ------------  ------------  ------------
<S>                                                <C>         <C>         <C>           <C>            <C>
ASSETS
Current assets:
  Cash and cash equivalents ....................   $  11,514   $   2,075   $  10,696     $      --      $  24,285
  Trade accounts receivable, net ...............      21,832      22,167      65,313        (1,615)       107,697
  Marketable securities ........................         159          --          --            --            159
  Prepaid expenses and other
     current assets ............................       6,523         264       9,830            --         16,617
                                                   ---------   ---------   ---------     ---------      ---------
     Total current assets ......................      40,028      24,506      85,839        (1,615)       148,758
Property and equipment, net ....................      37,585      24,251      58,764            --        120,600
Deferred income taxes ..........................      11,070          --          44            --         11,114
Goodwill, net ..................................       1,627      21,926      70,828            --         94,381
Other assets ...................................       7,532         121       3,374            --         11,027
Investments in subsidiaries ....................     180,112      94,999          --      (275,111)            --
Notes receivable, intercompany .................          --      22,203          --       (22,203)            --
                                                   ---------   ---------   ---------     ---------      ---------
     Total assets ..............................   $ 277,954   $ 188,006   $ 218,849     $(298,929)     $ 385,880
                                                   =========   =========   =========     =========      =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
  Notes payable ................................   $      --   $      --   $  14,376     $      --      $  14,376
  Current portion of long-term debt ............       2,026          --       8,767            --         10,793
  Current portion of capitalized
    lease obligations ..........................         308          98       4,528            --          4,934
  Trade accounts payable .......................       2,841       1,202      24,894        (1,615)        27,322
  Accrued expenses and other
     current liabilities .......................      11,168       6,210      34,410            --         51,788
                                                   ---------   ---------   ---------     ---------      ---------
     Total current liabilities .................      16,343       7,510      86,975        (1,615)       109,213
  Long-term debt, excluding
     current portion ...........................     101,488          --       1,017            --        102,505
  Capitalized lease obligations,
     excluding current portion .................         328         140      12,515            --         12,983
  Notes payable, intercompany and other ........          --         244      21,959       (22,203)            --
  Deferred compensation ........................       1,407          --          --            --          1,407
  Minority interest ............................          --          --       1,384            --          1,384
  Stockholders' equity .........................     158,388     180,112      94,999      (275,111)       158,388
                                                   ---------   ---------   ---------     ---------      ---------
Total liabilities and
     stockholders' equity ......................   $ 277,954   $ 188,006   $ 218,849     $(298,929)     $ 385,880
                                                   =========   =========   =========     =========      =========
</TABLE>
                                        8
<PAGE>
                       SITEL CORPORATION AND SUBSIDIARIES
               NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

9.  SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION (Continued):

                      Condensed Consolidating Balance Sheet
                               September 30, 1998
                                 (in thousands)

<TABLE>
<CAPTION>
                                                               Guarantor    Nonguarantor
                                                    Parent    Subsidiaries  Subsidiaries  Eliminations  Consolidated
                                                    ------    ------------  ------------  ------------  ------------
<S>                                                <C>         <C>          <C>           <C>            <C>
ASSETS
Current assets:
  Cash and cash equivalents ...................... $   6,401   $   3,165    $  12,919    $      --       $  22,485
  Trade accounts receivable, net .................    30,950      28,032       69,408       (8,485)        119,905
  Prepaid expenses and other current assets ......     4,785         (65)      14,108           --          18,828
                                                   ---------   ---------    ---------    ---------       ---------
     Total current assets ........................    42,136      31,132       96,435       (8,485)        161,218

Property and equipment, net ......................    26,709      24,700       66,563           --         117,972
Deferred income taxes ............................     8,995        (244)       5,416           --          14,167
Goodwill, net ....................................     1,560      21,247       71,637           --          94,444
Other assets .....................................    10,706          81        2,973           --          13,760
Investments in subsidiaries ......................   185,722      86,224           --     (271,946)             --
Notes receivable, intercompany ...................        --      30,857           --      (30,857)             --
                                                   ---------   ---------    ---------    ---------       ---------
     Total assets ................................ $ 275,828   $ 193,997    $ 243,024    $(311,288)      $ 401,561
                                                   =========   =========    =========    =========       =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
  Notes payable .................................. $      --   $      --    $  27,872    $      --       $  27,872
  Current portion of long-term debt ..............     2,056          --        1,334           --           3,390
  Current portion of capitalized lease
     obligations .................................       315          98        2,430           --           2,843
  Trade accounts payable .........................     2,267       1,670       25,725       (8,485)         21,177
  Accrued expenses and other current liabilities .     8,156       6,440       42,180           --          56,776
                                                   ---------   ---------    ---------    ---------       ---------
     Total current liabilities ...................    12,794       8,208       99,541       (8,485)        112,058

Long-term debt, excluding current portion ........   100,496          --        4,529           --         105,025
Capitalized lease obligations, excluding current
  portion ........................................        93          67       10,939           --          11,099
Notes payable, intercompany ......................        --          --       30,857      (30,857)             --
Deferred compensation ............................     1,645          --           --           --           1,645

Minority interest ................................        --          --       10,934           --          10,934

Stockholders' equity .............................   160,800     185,722       86,224     (271,946)        160,800
                                                   ---------   ---------    ---------    ---------       ---------
     Total liabilities and stockholders' equity .. $ 275,828   $ 193,997    $ 243,024    $(311,288)      $ 401,561
                                                   =========   =========    =========    =========       =========
</TABLE>
                                       9
<PAGE>
                       SITEL CORPORATION AND SUBSIDIARIES
               NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

9.  SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION (Continued):

               Condensed Consolidating Statement of Income (Loss)
                  For the three months ended September 30, 1997
                                 (in thousands)
<TABLE>
<CAPTION>
                                                               Guarantor    Nonguarantor
                                                    Parent    Subsidiaries  Subsidiaries  Eliminations  Consolidated
                                                    ------    ------------  ------------  ------------  ------------
<S>                                                <C>         <C>          <C>           <C>            <C>
Revenues                                           $  28,487   $  34,465    $  57,296     $        --    $   120,248
                                                   ---------   ---------    ---------     -----------    -----------
Operating expenses:
  Cost of services .............................      14,517      18,833       34,563              --         67,913
  Selling, general and
     administrative expenses ...................      14,475      12,867       22,129              --         49,471
                                                   ---------   ---------    ---------     -----------    -----------
  Total operating expenses .....................      28,992      31,700       56,692              --        117,384
                                                   ---------   ---------    ---------     -----------    -----------
  Operating income (loss) ......................        (505)      2,765          604              --          2,864
                                                   ---------   ---------    ---------     -----------    -----------
Other income (expense):
  Equity in earnings (losses) of
     subsidiaries, net of tax ..................       1,310        (493)          --            (817)            --
  Intercompany charges .........................         409         347         (756)             --             --
  Interest expense, net ........................        (947)       (294)        (271)             --         (1,512)
  Other income (expense) .......................         155         (35)           3              --            123
                                                   ---------   ---------    ---------     -----------    -----------
Total other income (expense) ...................         927        (475)      (1,024)           (817)        (1,389)
                                                   ---------   ---------    ---------     -----------    -----------
Income (loss) before income
     taxes and minority interest ...............         422       2,290         (420)           (817)         1,475

Income tax expense (benefit) ...................        (304)        980           63              --            739

Minority interest ..............................          --          --           10              --             10
                                                   ---------   ---------    ---------     -----------    -----------
     Net income (loss) .........................   $     726   $   1,310    $    (493)    $      (817)   $       726
                                                   =========   =========    =========     ===========    ===========
</TABLE>
                                       10
<PAGE>
                       SITEL CORPORATION AND SUBSIDIARIES
               NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

9.  SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION (Continued):

               Condensed Consolidating Statement of Income (Loss)
                  For the three months ended September 30, 1998
                                 (in thousands)

<TABLE>
<CAPTION>
                                                               Guarantor    Nonguarantor
                                                    Parent    Subsidiaries  Subsidiaries  Eliminations  Consolidated
                                                    ------    ------------  ------------  ------------  ------------
<S>                                                <C>          <C>          <C>           <C>            <C>

Revenues ...................................       $  32,921    $  46,295    $  67,539     $      --      $ 146,755
                                                   ---------    ---------    ---------     ---------      ---------
Operating expenses:
  Cost of services .........................          17,793       25,306       39,537            --         82,636
  Selling, general and
     administrative expenses ...............          16,656       15,281       27,108            --         59,045
                                                   ---------    ---------    ---------     ---------      ---------
     Total operating expenses ..............          34,449       40,587       66,645            --        141,681
                                                   ---------    ---------    ---------     ---------      ---------
  Operating income .........................          (1,528)       5,708          894            --          5,074
                                                   ---------    ---------    ---------     ---------      ---------
Other income (expense):
  Equity in earnings (losses)
     of subsidiaries, net of tax ...........           3,255         (704)          --        (2,551)            --
  Intercompany charges .....................              82          503         (585)           --             --
  Interest expense, net ....................          (2,362)        (120)        (975)           --         (3,457)
  Other income (expense) ...................            (173)           1          191            --             19
                                                   ---------    ---------    ---------     ---------      ---------
     Total other income (expense)...........             802         (320)      (1,369)       (2,551)        (3,438)
                                                   ---------    ---------    ---------     ---------      ---------
Income (loss) before income
     taxes and minority interest ...........            (726)       5,388         (475)       (2,551)         1,636

Income tax expense (benefit) ...............          (1,513)       2,133          216            --            836

Minority interest ..........................              --           --           13            --             13
                                                   ---------    ---------    ---------     ---------      ---------
     Net income (loss) .....................       $     787    $   3,255    $    (704)    $  (2,551)     $     787
                                                   =========    =========    =========     =========      =========
</TABLE>
                                       11
<PAGE>
                        SITEL CORPORATION AND SUBSIDIARIES
               NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

9.  SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION (Continued):

                   Condensed Consolidating Statement of Income
                  For the nine months ended September 30, 1997
                                 (in thousands)
 <TABLE>
<CAPTION>
                                                               Guarantor    Nonguarantor
                                                    Parent    Subsidiaries  Subsidiaries  Eliminations  Consolidated
                                                    ------    ------------  ------------  ------------  ------------
<S>                                                <C>         <C>          <C>           <C>            <C>

Revenues ....................................      $  83,365   $  95,231    $ 171,179     $      --      $ 349,775
                                                   ---------   ---------    ---------     ---------      ---------
Operating expenses:
  Cost of services ..........................         43,293      50,385       97,698            --        191,376
  Selling, general and
      administrative expenses ...............         38,223      33,736       61,054            --        133,013
                                                   ---------   ---------    ---------     ---------      ---------
  Total operating expenses ..................         81,516      84,121      158,752            --        324,389
                                                   ---------   ---------    ---------     ---------      ---------
  Operating income ..........................          1,849      11,110       12,427            --         25,386
                                                   ---------   ---------    ---------     ---------      ---------
Other income (expense):
  Equity in earning (losses) of
     subsidiaries, net of taxes .............         12,757       5,660           --       (18,417)            --
  Intercompany charges ......................            576         944       (1,520)           --             --
  Interest income (expense), net ............           (894)       (860)      (1,445)           --         (3,199)
  Other income (expense) ....................             94         (35)           3            --             62
                                                   ---------   ---------    ---------     ---------      ---------
    Total other income (expense) ............         12,533       5,709       (2,962)      (18,417)        (3,137)
                                                   ---------   ---------    ---------     ---------      ---------
Income (loss) before income
     taxes and minority interest ............         14,382      16,819        9,465       (18,417)        22,249

Income tax expense ..........................            596       4,062        3,719            --          8,377

Minority interest ...........................                         --           86            --             86
                                                   ---------   ---------    ---------     ---------      ---------
     Net income .............................      $  13,786   $  12,757    $   5,660     $ (18,417)     $  13,786
                                                   =========   =========    =========     =========      =========
</TABLE>
                                       12
<PAGE>
                       SITEL CORPORATION AND SUBSIDIARIES
               NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

9.  SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION (Continued):

               Condensed Consolidating Statement of Income (Loss)
                  For the nine months ended September 30, 1998
                                 (in thousands)

<TABLE>
<CAPTION>
                                                               Guarantor    Nonguarantor
                                                    Parent    Subsidiaries  Subsidiaries  Eliminations  Consolidated
                                                    ------    ------------  ------------  ------------  ------------
<S>                                                <C>         <C>          <C>           <C>            <C>
Revenues .....................................     $ 103,252   $ 133,111    $ 195,447     $      --      $ 431,810
                                                   ---------   ---------    ---------     ---------      ---------
Operating expenses:
  Cost of services ...........................        54,685      73,653      114,703            --        243,041
  Selling, general and
     administrative expenses .................        48,978      45,337       80,498            --        174,813
  Restructuring expenses .....................            --          --        6,607            --          6,607
                                                   ---------   ---------    ---------     ---------      ---------
     Total operating expenses ................       103,663     118,990      201,808            --        424,461
                                                   ---------   ---------    ---------     ---------      ---------
     Operating income (loss) .................          (411)     14,121      (6,361)            --          7,349
                                                   ---------   ---------   ---------      ---------      ---------
Other income (expense):
  Equity in earnings (losses)
     of subsidiaries, net of tax .............         1,925      (7,578)         --         5,653              --
  Intercompany charges .......................           203       1,379      (1,582)           --              --
  Interest expense, net ......................        (5,942)       (880)     (2,600)           --          (9,422)
  Other income (expense) .....................            (5)         --         193            --             188
                                                   ---------   ---------   ---------     ---------       ---------
     Total other income (expense) ............        (3,819)     (7,079)     (3,989)        5,653          (9,234)
                                                   ---------   ---------   ---------     ---------       ---------
Income (loss) before income
     taxes and minority interest .............        (4,230)      7,042     (10,350)        5,653          (1,885)

Income tax expense (benefit) .................        (2,520)      5,117      (2,522)           --              75

Minority interest ............................            --          --        (250)           --            (250)
                                                   ---------   ---------   ---------     ---------       ---------
     Net income (loss) from
       continuing operations .................        (1,710)      1,925      (7,578)        5,653          (1,710)

Extraordinary loss on
     refinancing of debt, net of taxes .......           514          --          --            --             514
                                                   ---------   ---------   ---------     ---------       ---------
     Net income (loss) .......................     $  (2,224)  $   1,925   $  (7,578)        5,653          (2,224)
                                                   =========   =========   =========     =========       =========
</TABLE>
                                       13
<PAGE>
                       SITEL CORPORATION AND SUBSIDIARIES
               NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

9.  SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION (Continued):

                 Condensed Consolidating Statement of Cash Flows
                  For the nine months ended September 30, 1997
                                 (in thousands)
<TABLE>
<CAPTION>
                                                               Guarantor    Nonguarantor
                                                    Parent    Subsidiaries  Subsidiaries  Eliminations  Consolidated
                                                    ------    ------------  ------------  ------------  ------------
<S>                                                <C>         <C>          <C>           <C>            <C>
Net cash provided by (used in)
     operating activities ......................   $  6,891    $ (7,377)    $  6,839      $     --       $  6,353
                                                   --------    --------     --------      --------       --------
Cash flows from investing activities:
  Investments in subsidiaries ..................    (54,539)    (36,764)          --        91,303             --
  Purchases of property and equipment ..........    (25,403)    (10,591)     (26,575)           --        (62,569)
  Acquisitions of businesses,
     net of cash acquired ......................    (19,921)         --      (15,096)           --        (35,017)
  Changes in other assets ......................         --          --         (127)           --           (127)
                                                   --------    --------     --------      --------       --------
  Net cash used in investing
     activities ................................    (99,863)    (47,355)     (41,798)       91,303        (97,713)
                                                   --------    --------     --------      --------       --------
Cash flows from financing activities:
  Borrowings on notes payable ..................     68,291          --        8,769            --         77,060
  Repayments of notes payable ..................    (68,291)         --         (149)           --        (68,440)
  Borrowings on long-term debt .................     92,483          --        4,379            --         96,862
  Repayment of long-term debt
     and capital lease obligations .............    (14,549)         --         (364)           --        (14,913)
  Net capital contribution
     from parent ...............................         --      54,539       36,764       (91,303)            --
  State incentive credits received .............        900          --           --            --            900
  Common stock issued for
     option exercises ..........................        227          --           --            --            227
                                                   --------    --------     --------      --------       --------
Net cash provided by financing activities ......     79,061      54,539       49,399       (91,303)        91,696
                                                   --------    --------     --------      --------       --------
Effect of exchange rates on cash ...............         --          --       (2,545)           --         (2,545)
                                                   --------    --------     --------      --------       --------
Net increase (decrease) in cash ................    (13,911)       (193)      11,895            --         (2,209)

Cash and cash equivalents,
     beginning of period .......................     13,302       1,859       10,549            --         25,710
                                                   --------    --------     --------      --------       --------
Cash and equivalents, end of period ............   $   (609)   $  1,666     $ 22,444      $     --       $ 23,501
                                                   ========    ========     ========      ========       ========
</TABLE>
                                       14
<PAGE>
                       SITEL CORPORATION AND SUBSIDIARIES
               NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

9.  SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION (Continued):

                 Condensed Consolidating Statement of Cash Flows
                  For the nine months ended September 30, 1998
                                 (in thousands)
<TABLE>
<CAPTION>
                                                               Guarantor    Nonguarantor
                                                    Parent    Subsidiaries  Subsidiaries  Eliminations  Consolidated
                                                    ------    ------------  ------------  ------------  ------------
<S>                                                <C>         <C>          <C>           <C>            <C>
Net cash provided by (used in)
     operating activities ......................   $  (7,627)  $  18,205    $   3,132     $      --      $  13,710
                                                   ---------   ---------    ---------     ---------      ---------
Cash flows from investing activities:
  Investments in subsidiaries ..................       6,692      (6,637)          --           (55)            --
  Dividend on common stock .....................          --      10,000           --       (10,000)            --
  Purchases of property and equipment ..........      (9,302)     (6,489)     (16,665)           --        (32,456)
  Proceeds from sale-lease
     backs of facility .........................       9,397          --           --                        9,397
  Acquisition of subsidiary ....................          --          --       (2,406)           --         (2,406)
  Acquisition of minority interest .............          --          --         (628)           --           (628)
  Sale of marketable securities ................         257          --           --            --            257
  Changes in other assets ......................          --          --         (438)           --           (438)
                                                   ---------   ---------    ---------     ---------      ---------
Net cash provided by (used in)
     investing activities ......................       7,044      (3,126)     (20,137)      (10,055)       (26,274)
                                                   ---------   ---------    ---------     ---------      ---------
Cash flows from financing activities:
  Borrowings on notes payable ..................          --          --       15,504            --         15,504
  Repayments of notes payable ..................          --          --       (2,866)           --         (2,866)
  Borrowings on long-term debt .................     124,383          --        2,150            --        126,533
  Repayment of long-term debt
     and capital lease obligations .............    (128,906)         --       (6,891)           --       (135,797)
  Net capital contribution from parent .........          --      (6,692)       6,637            55             --
  Net borrowings and payments
     on note to parent .........................          --      (7,297)       7,297            --             --
  Dividend on common stock .....................          --          --      (10,000)       10,000             --
  Capital  contribution from
    subsidiary shareholder .....................          --          --        1,400            --          1,400
  Sale of stock of subsidiaries ................          --          --        6,541            --          6,541
  Common stock issued for
    option exercises and other .................          (7)         --           --            --             (7)
                                                   ---------   ---------    ---------     ---------      ---------
Net cash provided by (used in)
     financing activities ......................      (4,530)    (13,989)      19,772        10,055         11,308
                                                   ---------   ---------    ---------     ---------      ---------
  Effect of exchange rates on cash .............          --          --         (544)           --           (544)
                                                   ---------   ---------    ---------     ---------      ---------
Net increase (decrease) in cash ................      (5,113)      1,090        2,223            --         (1,800)

Cash and cash equivalents,
     beginning of period .......................      11,514       2,075       10,696            --         24,285
                                                   ---------   ---------    ---------     ---------      ---------
Cash and equivalents, end of period ............   $   6,401   $   3,165    $  12,919     $      --      $  22,485
                                                   =========   =========    =========     =========      =========
</TABLE>
                                       15
<PAGE>
                       SITEL CORPORATION AND SUBSIDIARIES

Item 2.  Management's  Discussion  and  Analysis  of  Results of  Operation  and
         Financial Condition.

Overview

SITEL  Corporation and  subsidiaries  (the  "Company") are engaged  primarily in
inbound,  outbound,  and  interactive  teleservicing  activities,  servicing the
telecommunications,  financial services, insurance, technology, utilities, media
and entertainment,  consumer,  automotive and travel and hospitality industries.
Operations  are primarily  located in North  America,  Europe,  the Asia Pacific
region, and Latin America.

The following  table sets forth  certain  financial  data and the  percentage of
total  revenues of the Company  for the  periods  indicated.  All amounts are in
thousands.
<TABLE>
<CAPTION>
                                          Three Months Ended September 30,              Nine Months Ended September 30,
                                             1997                  1998                   1997               1998 (1)
                                             ----                  ----                   ----               --------
<S>                                    <C>           <C>    <C>           <C>    <C>           <C>    <C>           <C>
Revenues...........................    $  120,248    100%   $  146,755    100%   $  349,775    100%   $  431,810    100%
                                       ------------------   ------------------   ------------------   ------------------
Operating expenses:
   Cost of services................        67,913   56.5%       82,636   56.3%      191,376   54.7%      243,041   56.3%
   Selling, general, and
   administrative expenses.........        49,471   41.1%       59,045   40.2%      133,013   38.0%      174,813   40.5%
   Restructuring  expenses ........            --    0.0%           --    0.0%           --    0.0%        6,607    1.5%
                                       ------------------   ------------------   ------------------   ------------------
        Total operating expenses ..       117,384   97.6%      141,681   96.5%      324,389   92.7%      424,461   98.3%
                                       ------------------   ------------------   ------------------   ------------------
        Operating income...........         2,864    2.4%        5,074    3.5%       25,386    7.3%        7,349    1.7%

Interest expense, net..............        (1,512)  (1.2)%      (3,457)  (2.4%)      (3,199)  (0.9)%      (9,422)  (2.2)%
Other income.......................           123    0.0%           19    0.0%           62    0.0%          188    0.0%
                                       ------------------   ------------------   ------------------   ------------------
Income (loss) before income
  taxes and minority interest .....         1,475    1.2%        1,636    1.1%       22,249    6.4%       (1,885)  (0.4)%

Income tax expense ................           739    0.6%          836    0.6%        8,377    2.4%           75    0.0%
Minority interest .................            10    0.0%           13    0.0%           86    0.0%         (250)  (0.1)%
                                       ------------------   ------------------   ------------------   ------------------

Net income (loss) from             
  continuing operations ...........           726    0.6%          787    0.5%       13,786    3.9%       (1,710)  (0.4%)
Extraordinary loss on
  refinancing of debt, net of                                        
  taxes ...........................            --    0.0%           --    0.0%           --    0.0%          514    0.1%
                                       ------------------   ------------------   ------------------   ------------------
Net income (loss)..................    $      726    0.6%   $      787    0.5%   $   13,786    3.9%   $   (2,224)  (0.5%)
                                       ==================   ==================   ==================   ==================
<FN>
(1) Includes  non-recurring  restructuring  expenses.  Excluding those expenses,
operating income, net income from continuing  operations,  and basic and diluted
income per share were $14.0 million,  $2.8 million,  and $0.04  respectively for
the nine month period ended September 30, 1998.
</FN>
</TABLE>
                                       16
<PAGE>
                       SITEL CORPORATION AND SUBSIDIARIES

Three Months Ended September 30, 1998 vs. Three Months Ended September 30, 1997

Revenues:

Revenues  increased  $26.5  million,  or 22.0%,  to $146.8  million in the three
months ended  September  30, 1998 from $120.2  million in the three months ended
September 30, 1997. Of this increase, $20.0 million was attributable to services
initiated  for new clients and $6.5 million was  attributable  to revenues  from
businesses acquired under the purchase method of accounting. Revenues from North
American operations represented approximately 56% of total revenues in the three
months ended September 30, 1998, revenues from European  operations  represented
approximately   35%,   revenues   from  Asia  Pacific   operations   represented
approximately  6%  and  revenues  from  Latin  America  operations   represented
approximately 3%.

Cost of Services:

Cost of services  represents  primarily  labor and telephone  expenses  directly
related to teleservicing  activities.  Cost of services increased $14.7 million,
or 21.7%,  to $82.6  million in the three months ended  September  30, 1998 from
$67.9  million in the three months ended  September 30, 1997. As a percentage of
revenues,  cost of services decreased to 56.3% in the third quarter of 1998 from
56.5% in the third  quarter  of 1997.  The  decrease  in cost of  services  as a
percentage of revenues was primarily  attributable to decreases in Latin America
and Asia Pacific operations,  which were sufficient to offset increases in costs
of  services  as  a  percentage  of  revenue  in  European  and  North  American
operations.  The  increase  in European  operations  was  attributable  to lower
utilization  of  labor  resources  in  Europe,  which  costs  were  incurred  in
anticipation  of  higher   teleservicing   campaign  revenues,   which  did  not
materialize. The increase in the North America operations was attributable to an
increasing percentage of revenues being realized from lower gross margin sectors
of the  Company's  industry  focused  teleservicing  activities,  primarily  the
financial and insurance industries.

Selling, General and Administrative Expenses:

Selling,  general and  administrative  expenses  represent  expenses incurred to
directly  support  and  manage the  operations  including  costs of  management,
administration, facilities expenses, depreciation and amortization, maintenance,
sales and marketing activities,  and client support services.  Selling,  general
and administrative  expenses increased $9.6 million,  or 19.4%, to $59.0 million
in the three months  ended  September  30, 1998 from $49.5  million in the three
months ended  September  30, 1997.  This  increase was primarily a result of the
Company's  continued  growth  both  internally  and  through  acquisition.  As a
percentage of revenues,  selling,  general and administrative expenses decreased
to 40.2% in the third  quarter of 1998 from 41.1% in the third  quarter of 1997.
This  decrease was  primarily  due to higher than normal costs  associated  with
start up operations in Asia Pacific in 1997.

Operating Income:

Operating  income  increased to $5.1 million in the three months ended September
30, 1998 from $2.9 million in the three months ended  September  30, 1997.  This
increase  was  primarily  due to the  decreases  in both  cost of  services  and
selling,  general and  administrative  expenses as a  percentage  of revenues as
noted above.

Interest Expense, Net:

Interest expense, net of interest income, increased to $3.5 million in the three
months  ended  September  30, 1998 from $1.5  million in the three  months ended
September 30, 1997.  This  increase was  primarily  due to increased  borrowings
utilized to support the Company's growth, including acquisitions.

                                       17
<PAGE>
Income Tax Expense:

Income tax  expense  for the three  months  ended  September  30,  1998 was $0.8
million  compared to $0.7 million in the three months ended  September 30, 1997.
The income tax expense as a percent of income  before  income taxes and minority
interest  increased to 51.1% in the three months ended  September  30, 1998 from
50.1% in the three months ended  September 30, 1997. The difference  between the
Company's  income tax  expense  and that  which  would be  calculated  using the
statutory  Federal  income  tax  rate  of  34% on  income  is  primarily  due to
non-deductible business acquisition expenses and international,  state and local
income taxes.

Net Income:

For the reasons  discussed  above,  net income  increased to $0.8 million in the
three  months  ended  September  30, 1998 from $0.7  million in the three months
ended September 30, 1997.

Nine Months Ended September 30, 1998 vs. Nine Months Ended September 30, 1997

Revenues:

Revenues increased $82.0 million, or 23.5%, to $431.8 million in the nine months
ended  September 30, 1998 from $349.8 million in the nine months ended September
30, 1997. Of this increase, $65.6 million was attributable to services initiated
for new clients and increased  revenues from existing  clients and $16.4 million
was attributable to revenues from businesses  acquired under the purchase method
of accounting.  The increase in revenues from existing clients was primarily the
result of higher calling  volumes rather than higher rates.  Revenues from North
American operations  represented  approximately 58% of total revenue in the nine
months ended September 30, 1998,  revenues from European  operation  represented
approximately   34%,   revenues   from  Asia  Pacific   operations   represented
approximately  5%  and  revenues  from  Latin  America  operations   represented
approximately 3%.

Cost of Services:

Cost of services  increased  $51.7 million,  or 27.0%,  to $243.0 million in the
nine months  ended  September  30,  1998 from $191.4  million in the nine months
ended  September  30,  1997.  As a  percentage  of  revenues,  cost of  services
increased to 56.3% in the first nine months of 1998 from 54.7% in the first nine
months  of  1997.  The  overall  increase  in cost  of  services  was  primarily
attributable to lower utilization of labor resources in Europe, which costs were
incurred in anticipation of higher  teleservicing  campaign revenues,  which did
not materialize. The increase also relates to lower margins in the North America
region caused by an increasing  percentage of revenues being realized from lower
gross margin sectors of the Company's industry focused teleservicing activities,
primarily the financial and insurance industries.

Selling, General and Administrative Expenses:

Selling,  general and administrative expenses increased $41.8 million, or 31.4%,
to $174.8  million in the nine  months  ended  September  30,  1998 from  $133.0
million in the nine months ended September 30, 1997. This increase was primarily
a  result  of  the  Company's  continued  growth  both  internally  and  through
acquisition.  As a percentage of revenues,  selling,  general and administrative
expenses  increased  to 40.5% in the first nine months of 1998 from 38.0% in the
first  nine  months of 1997.  This  increase  was  primarily  due to lower  than
anticipated revenues from European operations and costs associated with start up
operations in Asia Pacific and Latin America.

Restructuring Expense:

The Company recorded non-recurring restructuring expenses of $6.6 million in the
second quarter of 1998. The restructuring  expenses primarily represent expenses
associated with severance  arrangements.  The charge was driven by two principal
factors, a lower level of campaign business,  which historically has represented
a large portion of the Company's  business in Europe, and the need to reposition
the Company's infrastructure for increasing amounts of outsourcing business.

                                       18
<PAGE>
Operating Income:

Operating  income  decreased to $7.3 million in the nine months ended  September
30, 1998 from $25.4 million in the nine months ended  September  30, 1997.  This
decrease was  primarily  due to the  restructuring  expenses and the increase in
both cost of services  and  selling,  general and  administrative  expenses as a
percentage  of revenue as noted  above.  Excluding  the  restructuring  expense,
operating income was $14.0 million for the nine months ended September 30, 1998.

Interest Expense, Net:

Interest expense, net of interest income,  increased to $9.4 million of interest
expense  in the nine  months  ended  September  30,  1998 from $3.2  million  of
interest  expense in the nine months ended September 30, 1997. This increase was
primarily due to increased  borrowings utilized to support the Company's growth,
including acquisitions.

Income Tax Expense:

Income tax expense  decreased to $0.1 million in the nine months ended September
30, 1998  compared to $8.4 million in the nine months ended  September 30, 1997.
Excluding the  restructuring  expenses,  income tax expense was $2.1 million for
the nine months ended September 30, 1998. The income tax expense as a percent of
income  before  income  taxes and  minority  interest,  excluding  restructuring
expenses  and related tax  effects,  increased to 45.0% in the nine months ended
September  30,  1998 from 37.7% in the nine  months  ended  September  30,  1997
primarily  due  to  the  impact  of  nondeductible   expenses   associated  with
acquisitions combined with lower operating income.

Net Income (Loss) From Continuing Operations and Net Income (Loss):

For the reasons  discussed above,  net income (loss) from continuing  operations
decreased to a $1.7 million  loss in the nine months  ended  September  30, 1998
from $13.8 million of income in the nine months ended September 30, 1997.  After
the extraordinary  loss on refinancing of debt, net income (loss) decreased to a
$2.2 million loss in the nine months ended  September  30, 1998.  Excluding  the
restructuring  expenses and the related tax effects,  net income from continuing
operations and net income for the nine months ended September 30, 1998, was $2.8
million and $2.3 million, respectively.

Liquidity and Capital Resources:

Cash provided by operating activities was approximately $13.7 million during the
nine month period ended  September  30, 1998.  This was  primarily the result of
noncash charges  partially offset by increases in accounts  receivable and other
assets and a decrease in accounts  payable.  The  Company  anticipates  that the
accounts receivable will continue to grow, using working capital, as the Company
continues to grow.  Cash used in investing  activities  in the nine months ended
September  30, 1998 of  approximately  $26.3  million was  primarily  related to
capital  expenditures  partially offset by the proceeds from  sale-leasebacks of
facilities.  Cash  provided by  financing  activities  in the nine months  ended
September  30,  1998  of  approximately   $11.3  million  primarily  related  to
borrowings on the Company's notes payable and the sale of stock of subsidiaries.
During the nine months ended  September 30, 1998, the Company also completed the
private placement of $100 million of 9.25% Senior  Subordinated  Notes due 2006.
The proceeds from the offering were used to repay borrowings  outstanding  under
the Company's long term revolving credit facility.

At  September  30,  1998,  the  Company  had  unused  lines of  credit  totaling
approximately $43.1 million. In the second and third quarter, the Company sought
and obtained  certain  modifications  to its existing  credit facility to permit
continued  availability of borrowing under such facility.  The Company  believes
that funds  generated  from  operations,  existing cash and the funds  available
under the credit  facility,  as  modified,  will be  sufficient  to finance  its
current  operations,  planned capital  expenditures  and internal growth for the
foreseeable future.

                                       19
<PAGE>
Year 2000 Issue

The Company  recognizes the need to ensure its operations  will not be adversely
impacted by Year 2000  software  and  embedded  system  failures.  Specifically,
computational  errors and system failures are a known risk with respect to dates
after  December 31, 1999.  The Company has  established a central Y2K compliance
office  that  reports  directly  to the  Chief  Technical  Officer.  Each of the
Company's  operating  units have also  designated  IT  personnel  to address the
issues that the unit faces and to report to the central Y2K  compliance  office.
The Company has  implemented a system which allows it to track all IT and non-IT
systems and facility functions for compliance with industry Y2K standards.  This
tracking system allows the Company to monitor and track each functional point as
a single item grouped by how critical  the item is in the  Company's  ability to
perform its daily functions. Based on the output from these data and an analysis
of the system reports, the Company believes that all functional points which are
critical to the Company's functions have been identified and assessed.  Further,
the Company  has  developed a  remediation  plan for each item in this  critical
list. Part of the Company's  remediation strategy is in concert with its efforts
to develop new and innovative systems for its internal operations.

IT  issues  - The  Company  is  moving  all of its IT  systems  into a state  of
readiness for the year 2000. The Company believes that it is making satisfactory
progress to ensure that it will be ready with all critical IT systems by the end
of June 1999.  The  functional  points  that are  defined as  critical IT issues
include  internal  and  external   computer   systems  for  revenue   generating
applications.  The Company has  developed  a strategy  for its mission  critical
internal  systems designed to have every functional point year 2000 compliant by
the end of June 1999. These internal systems represent  approximately 28% of the
overall  effort in the IT  applications  area.  The remaining 72% of the overall
effort in the IT area is in the interface and integration of external client and
vendor application  systems. The Company has implemented a three-step process of
contacting  significant  vendors  and clients to request  information  about the
status of their Y2K  compliance  efforts.  In  addition  to  communicating  with
significant  vendors, the Company is testing certain critical vendor application
systems for Y2K  compliance  and expects to document its  contingency  plans for
those systems by January 1, 1999. In addition to communicating  with significant
clients,  the  Company's  strategy to deal with  non-compliant  external  client
customer data is a windowing technique which will enable such data to be used by
the Company's systems.

Non IT issues  (facilities)  - Non-IT  issues,  with few  exceptions,  have been
classified into a non-critical  category.  The few exceptions  include dial tone
for the Company's  telephony and power from the Company's energy providers.  The
Company has  included  these  functional  points in the  critical  category  for
purposes  of  scheduling.  Based  on  communications  with  providers  of  these
services,  the Company  believes that these  services will not be interrupted by
Year  2000  failures.  The  Company's  contingency  plan  for the  loss of power
includes  generator  systems in the Company's  major  facilities.  The Company's
contingency  plan for loss of dial tone  includes  the  distribution  of network
services  across  several  providers.  This will allow the Company to  minimally
maintain its service levels in the event of a failure. The Company believes that
it is making  satisfactory  progress to ensure that all facility  related issues
that are material to operations will be compliant by the end of June 1999.

Phases - The  Company is  employing  a  four-phase,  nine-process  step  Project
Methodology that covers each aspect of Y2K compliance. The four phases are:

     *    Phase 1           Assessment
     *    Phase 2           Remediation
     *    Phase 3           Verification and Testing
     *    Phase 4           Implementation

                                       20
<PAGE>
Each  process  step  is  necessary  within  the  framework  and  provides  clear
management  checkpoints for gauging the progress of activity during execution of
the project plan. The following table outlines the phases and process steps:

                           Phase 1      Phase 2       Phase 3         Phase 4
                                                   Verification/
Process Steps            Assessment   Remediation     Testing     Implementation
--------------------------------------------------------------------------------
1.  Recognition/Awareness     X            X             X               X
2.  Inventory                 X
3.  Evaluation                X
4.  Determination             X
5.  Remediation                            X
6.  Re-engineering                         X
7.  Multi-level testing       X            X             X               X
8.  Implementation                                                       X
9.  Post-implementation                                                  X

The  Company  has  clearly  defined  each of the  process  steps in the  Project
Methodology.  The  Recognition/Awareness  step included communication of the Y2K
issues and their importance  throughout the Company. The Inventory step included
the  identification  and  cataloging  of each  item that  must be  verified  for
compliance with Y2K processing.  The Evaluation step involves the evaluation and
categorization  of the  critical  nature  of  each  item  based  on  established
criteria.  The Determination step includes making informed management  decisions
regarding the strategy to be taken for each  individual  item.  The  Remediation
step  involves  repair of all  components  of a process  that  could  improperly
process dates.  The  Re-engineering  step consists of rewriting and/or replacing
whole  units of  software  code.  The  Multi-level  testing  step  involves  the
development of detailed testing criteria and the implementation of those testing
plans.  The  Implementation  step  involves the  coordination  of the release of
applications/systems into the live systems environment.  The Post-implementation
step will include the on-going monitoring of applications/systems that have been
repaired and placed into the live systems environment.

The Company has completed the Recognition /Awareness and Inventory process steps
and nearly completed the Evaluation process step. Approximately 30% of the items
that the  Company  believes  it needs to  complete  to be Y2K  compliant  are in
process steps within Phase 2 -  Remediation,  and a small number of items are in
Phase's 3 and 4.

Costs of Y2K  Compliance  - The Company  currently  estimates  that the costs to
become Y2K compliant will  approximate  $18-22  million.  The Company  currently
anticipates  that  approximately  50% of these  costs will be for  hardware  and
software and the  remainder  will be primarily  internal  personnel  costs.  The
Company  estimates  that it has  incurred  less than $5 million  of these  costs
through  September  30, 1998.  The  estimated  hardware  and software  costs are
included  in  the  Company's  definition  of  Y2K  costs  in  cases  where  such
expenditures have been accelerated in order to address Y2K issues. These are the
Company's  current  cost  estimates  and it is  expected  that they may  change,
perhaps materially.

Risks - There are many  risks  associated  with the Year 2000  issue,  including
without  limitation the  possibility  that the Company will be unable to receive
client phone calls or that the Company will be unable to initiate phone calls on
behalf of its clients.  Such possibilities  could have a material adverse effect
on the Company  depending on the nature of the cause and the speed with which it
could be corrected  or an  alternative  implemented.  If the  Company's  service
providers are unable to provide network switching  capability,  the Company will
be unable to perform its revenue-producing  activities.  If the Company's client
customer data does not have Year 2000  compliant  dates,  additional  processing
will be required  before  revenue-producing  activities  using these data can be
performed.  If internal systems or vendor application  systems fail, the Company
will be unable to perform  revenue-producing  activities  until such time as the
problem can be isolated and repaired

The Company  believes that its critical  internal systems and procedures will be
ready and tested before the year 2000. The Company  believes that its reasonably
likely worst case  scenarios  will revolve  around  external  factors  including
vendors and clients.  Although the Company expects to focus approximately 72% of
its efforts in the IT area on this external  exposure,  the Company has far less
control over these issues. It is reasonably likely that not all of the Company's
clients  will have all of their  internal  systems  year 2000  compliant  before
January 1, 2000.

                                       21
<PAGE>
The costs of the project  and the dates on which the  Company  plans to complete
the Y2K  modifications  are based on  management's  best  estimates,  which were
derived using numerous  assumptions  of future  events,  including the continued
availability of certain resources, third party modification plans, the Company's
ability to implement  compliance in certain  critical  areas and other  factors.
However,  there can be no assurance that these  estimates will be achieved,  and
actual  results  could  differ  materially  from those  plans.  The  severity of
problems to be confronted by the Company for partial or complete  non-compliance
will depend on a variety of factors (such as the nature of the resulting problem
and the speed with which it could be  corrected or an  alternative  implemented)
which are currently unknown. Due to the general uncertainty inherent in the Year
2000 problem,  resulting in part from the uncertainty of the Year 2000 readiness
of vendors and clients,  the Company is unable to determine at this time whether
the  consequences  of Year  2000  failures  will have a  material  impact on the
Company's results of operations, liquidity or financial condition.

Euro

On January 1, 1999,  eleven  European Union member states will adopt the Euro as
their  common  national  currency.  Thereafter,  until  January  1,  2002,  (the
transition  period),  either  the  Euro  or a  participating  country's  present
currency  will  be  accepted  as  legal  tender.   Beginning  January  1,  2002,
Euro-denominated  bills and coins will be issued,  and by July 1, 2002, only the
Euro will be used. Management is addressing the strategic,  financial, and legal
issues related to the conversion process and is currently upgrading its business
systems  to  allow  for  transactions  in the  Euro  at the  Company's  European
facilities. These systems updates are expected to be completed and tested before
the end of the year. The Company does not anticipate any material  impact to its
revenues,  expenses or results of  operations as a result of the adoption of the
Euro.

Quarterly Results and Seasonality

The Company has  experienced  and  expects to continue to  experience  quarterly
variations  in its  results  of  operations  principally  due to the  timing  of
clients' teleservicing campaigns and the commencement of new contracts,  revenue
mix, and the timing of additional selling,  general and administrative  expenses
to support new business.  The Company experiences periodic  fluctuations related
to both the start-up costs  associated  with expansion into a new region and the
implementation of clients' teleservicing  activities. In addition, the Company's
business  tends to be slower  in the third  quarter  due to summer  holidays  in
Europe and, to a lesser  degree,  in the first quarter due to the  changeover of
client marketing strategies which often occurs at the beginning of the year.

Effects of Inflation

Inflation has not had a significant effect on the Company's operations. However,
there can be no assurance that inflation will not have a material  effect on the
Company's operations in the future.

Accounting Pronouncements

Statement of Financial  Accounting  Standard  ("SFAS")  131,  Disclosures  about
Segments of an Enterprise  and Related  Information,  was issued in June,  1997.
SFAS 131  establishes  standards  for the way that public  business  enterprises
report information about operating  segments in annual financial  statements and
requires that those  enterprises  report  selected  information  about operating
segments in annual financial reports issued to shareholders. It also established
standards for related disclosures about products and services,  geographic areas
and major  customers.  SFAS 131 is effective  for fiscal years  beginning  after
December  15,  1997.   The  Company   anticipates   adopting   this   accounting
pronouncement  in 1998;  however,  management  believes  that it will not have a
significant impact on the Company's annual consolidated financial statements.

SFAS 133,  Accounting for Derivative  Investments  and Hedging  Activities,  was
issued in June 1998.  SFAS 133 establishes  accounting  standards for derivative
instruments and for hedging activities. The standard is effective for all fiscal
quarters of fiscal years beginning after June 15, 1999. The Company  anticipates
adopting this accounting  pronouncement  in the third quarter of 1999;  however,
management  believes that it will not have a significant impact on the Company's
consolidated financial statements.

                                       22
<PAGE>
Forward-Looking Statements

This Form 10-Q contains forward-looking statements within the meaning of Section
27A of the Securities  Act and Section 21E of the Exchange Act. Such  statements
are identified by the use of forward-looking  words or phrases which may include
but are not limited to, "intended," "will be positioned," "expects," "expected,"
"anticipates,"   "anticipated,"   "believes"   and  similar   expressions.   The
forward-looking statements are based on the Company's current expectations.  All
statements other than statements of historical facts included in this Form 10-Q,
including those regarding the Company's financial  position,  business strategy,
projected  costs and plans and objectives of management  for future  operations,
are  forward-looking   statements.   Although  the  Company  believes  that  the
expectations reflected in such forward-looking statements are reasonable,  there
can be no assurance  that such  expectations  will prove to be correct.  Because
forward-looking statements involve risks and uncertainties, the Company's actual
results  could  differ  materially.  Important  factors  that could cause actual
results to differ  materially from the Company's  expectations may include,  but
are not limited to, the effects of leverage,  restrictions  imposed by the terms
of  indebtedness,  reliance on major clients,  risks  associated with managing a
global   business,    fluctuations   in   operating    results,    reliance   on
telecommunications and computer technology,  risks associated with the Company's
acquisition  strategy,  the  dependence on telephone  service,  the  competitive
industry,  dependence on labor force,  foreign  currency  risks,  the effects of
business regulation,  dependence on key personnel and control by management, and
risks associated with Year 2000 failures (see discussion above under the caption
"Year 2000 Issue"). All subsequent written and oral  forward-looking  statements
attributable  to the  Company or  persons  acting on behalf of the  Company  are
expressly qualified in their entirety by this paragraph.  The Company disclaims,
however, any intent or obligation to update its forward-looking statements.

                                       23
<PAGE>
                       SITEL CORPORATION AND SUBSIDIARIES

PART II - OTHER INFORMATION

Item 5.  Other Information.

         Effective June 29, 1998, the Securities and Exchange Commission adopted
         an amendment to Rule 14a-4 under the  Securities  Exchange Act of 1934.
         As  amended,  Rule  14a-4(c)(1)  relates  to the  Company's  use of its
         discretionary  proxy voting  authority  with  respect to a  shareholder
         proposal  which  the  shareholder  has not  sought  to  include  in the
         Company's  proxy  statement.  Under  amended Rule  14a-4(c)(1),  if the
         proponent of the proposal  fails to notify the Company at least 45 days
         prior  to the  month  and day of  mailing  of the  prior  year's  proxy
         statement  (or such other  date as is  specified  by an advance  notice
         provision),   management   proxies   will  be   allowed  to  use  their
         discretionary  voting  authority  when the  proposal  is  raised at the
         meeting, without any discussion of the matter in the proxy statement.

         The Board of  Directors  has  amended the  Company's  Bylaws to include
         advance notice  provisions.  These advance notice  provisions  apply to
         shareholder  nominations for director as well as shareholder  proposals
         of business for the annual  meeting of  shareholders.  If these advance
         notice provisions are not complied with, the  shareholder's  nomination
         for director or proposed  business  cannot be considered at the meeting
         and therefore the above rule on discretionary  voting authority will be
         inapplicable.

         The Company's  advance  notice  provisions  require that the Company be
         provided notice of shareholder nominations for director and shareholder
         proposals of business, in accordance with the procedures in the advance
         notice  provisions,  for the 1999  annual  meeting of  shareholders  by
         January 3, 1999 and for subsequent  annual  meetings of shareholders by
         at least 120 days prior to the month and day of the prior  year's proxy
         statement.  The Bylaws  amendment which sets forth these advance notice
         provisions is included in Exhibit 3.2 to this Form 10-Q.

Item 6.  Exhibits and Reports on Form 8-K.

(a)      Exhibits:

         (1) 3.1  Certificate of Designation of Series A Participating Preferred
                  Stock

             3.2  Amendment to Amended and Restated Bylaws

         (2) 4.1  Rights Agreement

            10.1 Second Amendment dated September 30, 1998 to Credit Agreement

            27  Financial Data Schedule

     ----------------
     (1)  Previously  filed  as  Exhibit A  to the Rights Agreement described in
          footnote (2) and incorporated herein by reference.

     (2)  Previously filed as Exhibit 1 to Form 8-A filed on August 24, 1998 and
          incorporated herein by reference.

(b)       Reports on Form 8-K.  The Company  filed the  following report on Form
          8-K during the quarter for which this report is filed:

          (1) The Company filed a Form 8-K on August  24, 1998  reporting  under
              Item 5 that it adopted a Shareholder Rights Plan.

                                       24
<PAGE>
                                   SIGNATURES

     Pursuant to the  requirements  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.

Date:  November 12, 1998              SITEL Corporation



                                      By:  /s/ W. Gar Richlin
                                         ---------------------------------------
                                         W. Gar Richlin
                                         Executive Vice-President and Chief
                                         Financial Officer
                                         (Principal Financial Officer)

                                       25
<PAGE>
                       SITEL CORPORATION AND SUBSIDIARIES

Exhibits Index:                                                             Page
                                                                            ----

     (1)        3.1   Certificate of Designation of Series A
                      Participating Preferred Stock

                3.2   Amendment to Amended and Restated Bylaws              27

     (2)        4.1   Rights Agreement

               10.1   Second Amendment dated September 30, 1998 to Credit
                      Agreement                                             29

               27     Financial Data Schedule                               35

     ----------------------------------
               (1)    Previously filed as Exhibit A to the Rights Agreement
                      described in footnote (2) and incorporated herein
                      by reference

               (2)    Previously filed as Exhibit 1 to Form 8-A filed on
                      August 24, 1998 and incorporated herein by reference.

                                       26