UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K

[X] Annual Report Pursuant To Section 13 Or 15(d) Of The Securities Exchange Act Of 1934
For the fiscal year ended December 31, 2010
Or
[ ] Transition Report Pursuant To Section 13 Or 15(d) Of The Securities Exchange Act Of 1934
For The Transition Period From            To           

Commission File Number 0-28274
Sykes Enterprises, Incorporated
(Exact name of registrant as specified in its charter)

Florida		56-1383460
(State or other jurisdiction of		(IRS Employer
incorporation or organization)		Identification No.)

400 N. Ashley Drive, Suite 2800, Tampa, Florida		33602
(Address of principal executive offices)		(Zip Code)

(813) 274-1000
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class		Name of each exchange on which registered
Common Stock $.01 Par Value		NASDAQ Stock Market, LLC

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

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes [ ]                    No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. 
Yes [ ]                    No [X]

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X]                    No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [ ]                    No [ ]

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “accelerated filer,” “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one):

Large accelerated filer [ ]

Accelerated filer [X]

Non-accelerated filer [ ] (Do not check if a smaller reporting company)

Smaller reporting company [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [ ]                    No [X]

The aggregate market value of the shares of voting common stock held by non-affiliates of the Registrant computed by reference to the closing sales price of such shares on the NASDAQ Global Select Market on June 30, 2010, the last business day of the Registrant’s most recently completed second fiscal quarter, was $580,104,317.

As of February 28, 2011, there were 47,075,251 outstanding shares of common stock.

DOCUMENTS INCORPORATED BY REFERENCE:

Documents		Form 10-K Reference
Portions of the Proxy Statement for the year 2011 Annual Meeting of Shareholders		Part III Items 10–14

TABLE OF CONTENTS

				Page No.
PART I
Item 1		Business			3
Item 1A		Risk Factors			11
Item 1B		Unresolved Staff Comments			19
Item 2		Properties			20
Item 3		Legal Proceedings			23
Item 4		Reserved			23
PART II
Item 5		Market for the Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities			24
Item 6		Selected Financial Data			26
Item 7		Management’s Discussion and Analysis of Financial Condition and Results of Operations			27
Item 7A		Quantitative and Qualitative Disclosures About Market Risk			45
Item 8		Financial Statements and Supplementary Data			46
Item 9		Changes in and Disagreements with Accountants on Accounting and Financial Disclosure			47
Item 9A		Controls and Procedures			47
Item 9B		Other Information			49
PART III
Item 10		Directors, Executive Officers and Corporate Governance			49
Item 11		Executive Compensation			49
Item 12		Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters			49
Item 13		Certain Relationships and Related Transactions, and Director Independence			49
Item 14		Principal Accountant Fees and Services			49
PART IV
Item 15		Exhibits and Financial Statement Schedules			50
EX-21.1
EX-23.1
EX-31.1
EX-31.2
EX-32.1
EX-32.2

PART I

Item 1. Business

General

Sykes Enterprises, Incorporated and consolidated subsidiaries (“SYKES,” “our,” “us” or “we”) is a global leader in providing outsourced customer contact management solutions and services in the business process outsourcing (“BPO”) arena. We provide an array of sophisticated customer contact management solutions to a wide range of clients including Fortune 1000 companies, medium-sized businesses, and public institutions around the world, primarily in the communications, financial services, technology/consumer, transportation and leisure, healthcare and other verticals. We serve our clients through two geographic operating regions: the Americas (United States, Canada, Latin America, India and the Asia Pacific Rim) and EMEA (Europe, the Middle East and Africa). Our Americas and EMEA groups primarily provide customer contact management services (with an emphasis on inbound technical support and customer service), which includes customer assistance, healthcare and roadside assistance, technical support and product sales to our client’s customers. These services are delivered through multiple communication channels including phone, e-mail, Internet, text messaging and chat. We also provide various enterprise support services in the United States that include services for our client’s internal support operations, from technical staffing services to outsourced corporate help desk services. In Europe, we also provide fulfillment services including multilingual sales order processing via the Internet and phone, inventory control, product delivery and product returns handling. (See Note 26, Segments and Geographic Information, of “Notes to Consolidated Financial Statements” for further information on our segments.) Our complete service offering helps our clients acquire, retain and increase the lifetime value of their customer relationships. We have developed an extensive global reach with customer contact management centers across six continents, including North America, South America, Europe, Asia, Australia and Africa. We deliver cost-effective solutions that enhance the customer service experience, promote stronger brand loyalty, and bring about high levels of performance and profitability.

SYKES was founded in 1977 in North Carolina and we moved our headquarters to Florida in 1993. In March 1996, we changed our state of incorporation from North Carolina to Florida. Our headquarters are located at 400 North Ashley Drive, Suite 2800, Tampa, Florida 33602, and our telephone number is (813) 274-1000.

On February 2, 2010, the Company completed the acquisition of ICT Group Inc. (“ICT”), a Pennsylvania corporation and a leading global provider of outsourced customer management and BPO solutions, pursuant to the Agreement and Plan of Merger, dated October 5, 2009. We refer to such acquisition herein as the “ICT acquisition.” The Company has reflected the operating results in the Consolidated Statement of Operations for the period from February 2, 2010 to December 31, 2010. See Note 2, Acquisition of ICT, of “Notes to Consolidated Financial Statements” for additional information on the acquisition of this business.

In December 2010, we committed to a plan and completed the sale of our Argentine operations, pursuant to stock purchase agreements, dated December 16, 2010 and December 29, 2010. We have reflected the operating results related to the Argentine operations as discontinued operations in the Consolidated Statements of Operations for all periods presented. See Note 3, Discontinued Operations, of “Notes to Consolidated Financial Statements” for additional information on the sale of the Argentine operations.

Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports, as well as our proxy statements and other materials which are filed with, or furnished to, the Securities and Exchange Commission (“SEC”) are made available, free of charge, on or through our Internet website at www.sykes.com (click on “Investor Relations” and then “SEC Filings” under the heading “Financial Information”) as soon as reasonably practicable after they are filed with, or furnished to, the SEC.

Industry Overview

We believe that growth for outsourced customer contact management solutions and services will be fueled by the trend of global Fortune 1000 companies and medium-sized businesses turning to outsourcers to provide high-quality, cost-effective, value-added customer contact management solutions. Businesses continue to move toward integrated solutions that consist of a combination of support from our onshore markets in the United States, Canada, Africa and Europe and offshore markets in the Asia Pacific Rim and Latin America.

In today’s ever-changing marketplace, companies require innovative customer contact management solutions that allow them to enhance the end user’s experience with their products and services, strengthen and enhance their company brands, maximize the lifetime value of their customers, efficiently and effectively deliver human interaction when customers value it most, and deploy best-in-class customer management strategies, processes and technologies.

Global competition, pricing pressures, softness in the global economy and rapid changes in technology continue to make it difficult for companies to cost effectively maintain the in-house personnel necessary to handle all of their customer contact management needs. As a result, companies are increasingly turning to outsourcers to perform specialized functions and services in the customer contact management arena. By working in partnership with outsourcers, companies can ensure that the crucial task of retaining and growing their customer base is addressed.

Companies outsource customer contact management solutions for various reasons, including the need to focus on core competencies, to drive service excellence and execution, to achieve cost savings, to scale and grow geographies and niche markets, and to efficiently allocate capital within their organizations.

To address these needs, we offer global customer contact management solutions that focus on proactively identifying and solving our clients’ business challenges. We provide consistent high-value support for our clients’ customers across the globe in a multitude of languages, leveraging our dynamic, secure communications infrastructure and our global footprint that reaches across 24 countries. This global footprint includes established operations in both onshore and offshore geographic markets where companies have access to high-quality customer contact management solutions at lower costs compared to other markets.

Business Strategy

Our goal is to proactively provide enhanced and value-added customer contact management solutions and services, acting as a partner in our client’s business. We anticipate trends and deliver new ways of growing our clients’ customer satisfaction and retention rates, and thus profit, through timely, insightful and proven solutions.

Our business strategy encompasses building long-term client relationships, capitalizing on our expert worldwide response team, leveraging our depth of relevant experience and expanding both organically and through acquisitions. The principles of this strategy include the following:

Build Long-Term Client Relationships Through Operational Excellence. We believe that providing high-value, high-quality service is critical in our clients’ decisions to outsource and in building long-term relationships with our clients. To ensure service excellence and consistency across each of our centers globally, we leverage a portfolio of techniques including SYKES Science of Service^®. This standard is a compilation of more than 30 years of experience and best practices. Every customer contact management center strives to meet or exceed the standard, which addresses leadership, hiring and training, performance management down to the agent level, forecasting and scheduling, and the client relationship including continuous improvement, disaster recovery plans and feedback.

Capitalize on Our Worldwide Response Team. Companies are demanding a customer contact management solution that is global in nature — one of our key strengths. In addition to our network of customer contact management centers throughout North America and Europe, we continue to develop our global delivery model with operations in the Philippines, The Peoples Republic of China, Costa Rica, El Salvador, Egypt, Romania, Norway and Brazil, offering our clients a secure, high-quality solution tailored to the needs of their diverse and global markets. With the acquisition of ICT, we expanded our global delivery model with operations in Mexico, India and Australia.

Maintain a Competitive Advantage Through Technology Solutions. For more than 30 years, we have been an innovative pioneer in delivering customer contact management solutions. We seek to maintain a competitive advantage and differentiation by utilizing technology to consistently deliver innovative service solutions, ultimately enhancing the client’s relationship with its customers and generating revenue growth. This includes knowledge solutions for agents and end customers, automatic call distributors, interactive voice response systems, intelligent call routing and workforce management capabilities based on agent skill and availability, call tracking software, quality management systems and computer-telephony integration (“CTI”). CTI enables our customer contact management centers to serve as transparent extensions for our clients, receive telephone calls and data directly from our clients’ systems, and report detailed information concerning the status and results of our services on a daily basis.

Through strategic technology relationships, we are able to provide fully integrated communication services encompassing e-mail, chat, text messaging and Internet self-service platforms. In addition, we utilize Global Direct, our customer relationship management (“CRM”)/e-commerce application for our European fulfillment operations. Global Direct establishes a platform whereby our clients can manage all customer profile and contact information from every communication channel, making it a viable customer-facing infrastructure solution to support their CRM initiatives.

We are also continuing to capitalize on sophisticated technological capabilities, including our current digital private network that provides us the ability to manage call volumes more efficiently by load balancing calls and data between customer contact management centers over the same network. Our converged voice and data digital communications network provides a high-quality, fault tolerant global network for the transport of Voice Over Internet Protocol communications and fully integrates with emergent Internet Protocol telephony systems as well as traditional Time Domain Multiplexing telephony systems. Our flexible, secure and scalable network infrastructure allows us to rapidly respond to changes in client voice and data traffic and quickly establish support operations for new and existing clients.

Continue to Grow Our Business Organically and through Acquisitions. We have grown our customer contact management outsourcing operations utilizing a strategy of both internal organic growth and external acquisitions.

On February 2, 2010, we completed the ICT acquisition. The strategic rationale behind the acquisition was as follows:

	•		Expanded Client Portfolio. We doubled the number of new clients in the financial services and communication verticals, thus deepening our expertise within those verticals.
	•		Accelerated Entry into New Verticals. ICT has clients in the healthcare vertical in the United States (“U.S.”), along with clients in the utilities vertical, which are new to us. Accordingly, the ICT acquisition provided an entry into those verticals on an accelerated basis.
	•		Extended Delivery Footprint. The ICT acquisition extends our geographic footprint into India, Mexico and Australia, providing us with additional delivery capabilities for our existing clients.
	•		Sustainable Revenue Growth and Margin Expansion. The addition of ICT’s clients to our portfolio, together with ICT’s expertise in certain verticals, provides us with the ability to provide a greater depth of services to existing clients, thereby creating revenue growth rates that are expected to be more consistent and sustainable than can be achieved by growth solely from a new client sales pipeline. Additionally, the increase in annual revenues permits the leverage of our infrastructure to improve and sustain margins.
	•		Revenue Scale. The increase in revenues resulting from the ICT acquisition allows us to pursue client acquisition opportunities that are larger and more complex in scope.
	•		Reduced Client Concentration. The addition of new clients in new verticals to our existing client portfolio further reduces our client concentration, thereby further mitigating our risk profile.
	•		ICT Acquisition Consideration Mix. The terms of the ICT acquisition providing for each of ICT’s 16.364 million outstanding shares of common stock to be converted into $7.69 in cash and 0.3423 of a share of SYKES stock allowed us to achieve the benefits of the ICT acquisition without depleting our cash reserves, thereby maintaining a strong balance sheet.
	•		Realization of Synergies. In 2010, we realized synergies of approximately $28 million as a result of the ICT acquisition. These synergies were realized primarily through the elimination of duplicative general and administrative expenses, operational synergies and implementation of our lower cost structure.

Our organic growth strategy is to target markets, clients, verticals, delivery geographies and service mix that will expand our addressable market opportunity, and thus drive our organic growth. Entry into Brazil, Romania, Egypt and El Salvador are examples of how we leveraged these new delivery geographies to further penetrate our base of both existing and new clients, verticals and service mix in order to drive organic growth.

Growth Strategy

Applying the key principles of our business strategy, we execute our growth strategy by focusing on the following levers.

Maximizing Capacity Utilization Rates and Strategically Adding Seat Capacity. The key driver of our revenues is increasing the capacity utilization rate in conjunction with seat capacity additions. With the acquisition of ICT and our organic expansion, net of the sale of our Argentine operations, our seats increased to 42,700 from 32,700 in 2010. We plan to sustain our focus on increasing the capacity utilization rate by further penetrating existing clients, adding new clients and rationalizing seat capacity as deemed necessary.

Broadening Global Delivery Footprint. Just as increased capacity utilization rates and increased seat capacity are key drivers of our revenues, where we deploy the seat capacity geographically is also important. By broadening and continuously strengthening our global delivery footprint, we are able to meet both our existing and new clients’ customer contact management needs globally as they enter new markets. As a result of the ICT acquisition and our organic expansion, net of the sale of our Argentine operations, our footprint increased to 24 countries from 20 countries in 2010.

Increasing Share of Seats Within Existing Clients and Winning New Clients. We provide customer contact management support to over 100 multinational companies. With this client list, we have the opportunity to grow our client base. We strive to achieve this by winning a greater share of our clients’ in-house seats as well as gain share from our competitors by providing consistently high-quality service. In addition, as we further leverage our knowledge of verticals and business lines, we plan to win new clients as a way to broaden our base of growth.

Diversifying Verticals and Expanding Service Lines. To mitigate the impact of economic and product cycles on our growth rate, we continue to seek ways to diversify into verticals and service lines that have countercyclical features and healthy growth rates.  We are targeting the following verticals for growth:  communications, financial services, technology/consumer, healthcare and transportation and leisure.  These verticals cover various business lines, including wireless services, broadband, retail banking, credit card/consumer fraud protection, content moderation, telemedicine and travel portals. The ICT acquisition expanded our presence in the utilities vertical, in addition to our target verticals.

Creating Value-Added Service Enhancements. To improve both revenue and margin expansion, we will continue to introduce new service offerings and add-on enhancements.  Bilingual customer support and back office services are examples of horizontal service offerings, while data analytics and process improvement products are examples of add-on enhancements.

Continuing to Focus on Expanding the Addressable Market Opportunities. As part of our growth strategy, we continually seek to expand the number of markets we serve. The United States, Canada and Germany, for instance, are markets, which are served by either in-country or from offshore regions, or a combination thereof. We continually seek ways to broaden the addressable market for our customer contact management services. We expanded our market presence to 18 from 17 in 2010 with the addition of Australia through the ICT acquisition and Norway, offset by the sale of our Argentine operations.

Services

We specialize in providing inbound outsourced customer contact management solutions in the BPO arena on a global basis. Our customer contact management services are provided through two operating segments — the Americas and EMEA. The Americas region, representing 81% of consolidated revenues in 2010, includes the United States, Canada, Latin America, India and the Asia Pacific Rim. The sites within Latin America, India and the Asia Pacific Rim are included in the Americas region as they provide a significant service delivery vehicle for U.S. based companies that are utilizing our customer contact management solutions in these locations to support their customer care needs. The EMEA region, representing 19% of consolidated revenues in 2010, includes Europe, the Middle East and Africa. See Note 26, Segments and Geographic Information, of “Notes to Consolidated Financial Statements” for further information on our segments. The following is a description of our customer contact management solutions:

Outsourced Customer Contact Management Services. Our outsourced customer contact management services represented approximately 98% of total 2010 consolidated revenues. Each year we handle over 250 million customer contacts including phone, e-mail, Internet, text messaging and chat throughout the Americas and EMEA regions. We provide these services utilizing our advanced technology infrastructure, human resource management skills and industry experience. These services include:

§		Customer care — Customer care contacts primarily include product information requests, describing product features, activating customer accounts, resolving complaints, cross-selling/up-selling, handling billing inquiries, changing addresses, claims handling, ordering/reservations, prequalification and warranty management, providing health information and roadside assistance;
§		Technical support — Technical support contacts primarily include handling inquiries regarding hardware, software, communications services, communications equipment, Internet access technology and Internet portal usage; and
§		Acquisition — Our acquisition services are primarily focused on inbound up-selling of our client’s products and services.

We provide these services, primarily inbound customer calls, through our extensive global network of customer contact management centers in a multitude of languages. Our technology infrastructure and managed service solutions allow for effective distribution of calls to one or more centers. These technology offerings provide our clients and us with the leading edge tools needed to maximize quality and customer satisfaction while controlling and minimizing costs.

Fulfillment Services. In Europe, we offer fulfillment services that are integrated with our customer care and technical support services. Our fulfillment solutions include multilingual sales order processing via the Internet and phone, payment processing, inventory control, product delivery and product returns handling.

Enterprise Support Services. In the United States, we provide a range of enterprise support services including technical staffing services and outsourced corporate help desk solutions.

Operations

Customer Contact Management Centers. At the end of 2010, we operated across 24 countries in 83 customer contact management centers, which breakdown as follows: 23 centers across Europe, Egypt and South Africa, 27 centers in the United States, 10 centers in Canada, 3 centers in Australia and 20 centers offshore, including The Peoples Republic of China, the Philippines, Costa Rica, El Salvador, India, Mexico and Brazil.

In an effort to stay ahead of industry off-shoring trends, we opened our first offshore customer contact management centers in the Philippines and Costa Rica over ten years ago. Since then, we have expanded into centers in The People’s Republic of China, El Salvador, Egypt, India, Mexico and Brazil.

We utilize a sophisticated workforce management system to provide efficient scheduling of personnel. Our internally developed digital private communications network complements our workforce by allowing for effective call volume management and disaster recovery backup. Through this network and our dynamic intelligent call routing capabilities, we can rapidly respond to changes in client call volumes and move call volume traffic based on agent availability and skill throughout our network of centers, improving the responsiveness and productivity of our agents. We also can offer cost competitive solutions for taking calls to our offshore locations.

Our sophisticated data warehouse captures and downloads customer contact information for reporting on a daily, real-time and historical basis. This data provides our clients with direct visibility into the services that we are providing for them. The data warehouse supplies information for our performance management systems such as our agent scorecarding application, which provides management with the information required for effective management of our operations.

Our customer contact management centers are protected by a fire extinguishing system, backup generators with significant capacity and 24 hour refueling contracts and short-term battery backups in the event of a power outage, reduced voltage or a power surge. Rerouting of call volumes to other customer contact management centers is also

available in the event of a telecommunications failure, natural disaster or other emergency. Security measures are imposed to prevent unauthorized physical access. Software and related data files are backed up daily and stored off site at multiple locations. We carry business interruption insurance covering interruptions that might occur as a result of certain types of damage to our business.

Fulfillment Centers. We currently have two fulfillment centers located in Europe. We provide our fulfillment services primarily to certain clients operating in Europe who desire this complementary service in connection with outsourced customer contact management services.

Enterprise Support Services Offices. Our two enterprise support services offices are located in metropolitan areas in the United States to provide a recruiting platform for high-end knowledge workers and to establish a local presence to service major accounts.

Quality Assurance

We believe that providing consistent high-quality service is critical in our clients’ decision to outsource and in building long-term relationships with our clients. It is also our belief and commitment that quality is the responsibility of each individual at every level of the organization. To ensure service excellence and continuity across our organization, we have developed an integrated Quality Assurance program consisting of three major components:

§		The certification of client accounts and customer contact management centers to the SYKES Science of Service® and Site of Excellence programs;
§		The application of continuous improvement through application of our Data Analytics and Six Sigma techniques; and
§		The application of process audits to all work procedures.

The SYKES Science of Service^® is a standard that was developed based on our more than 30 years of experience, and best practices from industry standards such as the Malcolm Baldrige National Quality Award and Customer Operations Performance Center. It specifies the requirements that must be met in each of our customer contact management centers including measured performance against our standard operating procedures. It has a well-defined auditing process that ensures compliance with the SYKES’ standards. Our focus is on quality, predictability and consistency over time, not just point in time certification.

The application of continuous improvement is based upon the five-step Six Sigma cycle, which we have fine-tuned to apply specifically to our service industry. All managers are responsible for continuous improvement in their operations.

Process audits are used to verify that processes and procedures are consistently executed as required by established documentation. Process audits are applicable to services being provided for the client and internal procedures.

Sales and Marketing

Our sales and marketing objective is to leverage our expertise and global presence to develop long-term relationships with existing and future clients. Our customer contact management solutions have been developed to help our clients acquire, retain and increase the value of their customer relationships. Our plans for increasing our visibility include market-focused advertising, consultative personal visits, participation in market-specific trade shows and seminars, speaking engagements, articles and white papers, and our website.

Our sales force is composed of business development managers who pursue new business opportunities and strategic account managers who manage and grow relationships with existing accounts. We emphasize account development to strengthen relationships with existing clients. Business development management and strategic account managers are assigned to markets in their area of expertise in order to develop a complete understanding of each client’s particular needs, to form strong client relationships and encourage cross-selling of our other service offerings. We have inside customer sales representatives who receive customer inquiries and who provide outbound lead generation for the business development managers. We also have relationships with channel partners including systems integrators, software and hardware vendors and value-added resellers, where we pair our solutions and services with their product offering or focus. We plan to maintain and expand these relationships as part of our sales and marketing strategy.

As part of our marketing efforts, we invite existing and potential clients to visit our customer contact management centers, where we can demonstrate the expertise of our skilled staff in partnering to deliver new ways of growing clients’ customer satisfaction and retention rates, and thus profit, through timely, insightful and proven solutions. During these visits, we demonstrate our ability to quickly and effectively support a new client or scale business from an existing client by emphasizing our systematic approach to implementing customer contact solutions throughout the world.

Clients

In 2010, we provided service to clients from our locations in the United States, Canada, Latin America, Europe, the Philippines, The Peoples Republic of China, India and Africa. These clients are Fortune 1000 corporations, medium-sized businesses and public institutions, which span the communications, financial services, technology/consumer, transportation and leisure, healthcare and other industries. Revenue by vertical market for 2010, as a percentage of our consolidated revenues, was 33% for communications, 25% for financial services, 21% for technology/consumer, 7% for transportation and leisure, 7% for healthcare, and 7% for all other vertical markets, including government, retail and utilities. We believe our globally recognized client base presents opportunities for further cross marketing of our services.

Total consolidated revenues included $154.1 million, or 13.3%, of consolidated revenues for 2010 from AT&T Corporation, a major provider of communication services for which we provide various customer support services, compared to $111.3 million, or 13.7% for 2009. This included $147.6 million in revenues from the Americas and $6.5 million in revenues from EMEA for 2010 and $102.1 million in revenues from the Americas and $9.2 million in revenues from EMEA for 2009. Our top ten clients accounted for approximately 41% of our consolidated revenues in 2010, a decrease from 48% in 2009. Our broader base of clients in 2010, primarily due to the ICT acquisition, resulted in a reduction in client concentration; therefore, a lower percentage of consolidated revenues originated from our top ten clients. The loss of (or the failure to retain a significant amount of business with) any of our key clients could have a material adverse effect on our performance. Many of our contracts contain penalty provisions for failure to meet minimum service levels and are cancelable by the client at any time or on short notice. Also, clients may unilaterally reduce their use of our services under our contracts without penalty.

Competition

The industry in which we operate is global and, therefore, highly fragmented and extremely competitive. While many companies provide customer contact management solutions and services, we believe no one company is dominant in the industry.

In most cases, our principal competition stems from our existing and potential clients’ in-house customer contact management operations. When it is not the in-house operations of a client, our public and private direct competition includes TeleTech, Sitel, APAC Customer Services, Convergys, West Corporation, Stream, Aegis BPO, Sutherland, 24/7 Customer, vCustomer, StarTek, Atento, Teleperformance, and NCO Group as well as the customer care arm of such companies as Accenture, Wipro, Infosys and IBM. There are other numerous and varied providers of such services, including firms specializing in various CRM consulting, other customer management solutions providers, niche or large market companies, as well as product distribution companies that provide fulfillment services. Some of these companies possess substantially greater resources, greater name recognition and a more established customer base than we do.

We believe that the most significant competitive factors in the sale of outsourced customer contact management services include service quality, tailored value-added service offerings, industry experience, advanced technological capabilities, global coverage, reliability, scalability, security, price and financial strength. As a result of intense competition, outsourced customer contact management solutions and services frequently are subject to pricing pressure. Clients also require outsourcers to be able to provide services in multiple locations. Competition for contracts for many of our services takes the form of competitive bidding in response to requests for proposal.

Intellectual Property

We own and/or have applied to register numerous trademarks and service marks in the United States and/or in many additional countries throughout the world. Our registered trademarks and service marks include SYKES^®, REAL PEOPLE. REAL SOLUTIONS^®, SCIENCE OF SERVICE^®, CLEARCALL^®, I AM SYKES. HOW FAR WILL

YOU LET ME TAKE YOU? ^®, and ICT^®. The duration of trademark registrations varies from country to country, but may generally be renewed indefinitely as long as they are in use and/or their registrations are properly maintained.

Employees

As of January 31, 2011, we had approximately 43,400 employees worldwide, including 40,400 customer contact agents handling technical and customer support inquiries at our centers, 2,800 in management, administration, information technology, finance, sales and marketing roles, 100 in enterprise support services, and 100 in fulfillment services.

We have never suffered a material interruption of business as a result of a labor dispute. Due to laws in their respective countries, Brazil and Spain require that wages are collectively bargained for certain non-management employees. The negotiations are conducted irrespective of the individual employee’s member status relative to the union. In the two countries, approximately 1,600 employees are governed by laws whereby their wages are determined by collective bargaining: 200 in Brazil and 1,400 in Spain. We consider our relations with our employees worldwide to be satisfactory.

We employ personnel through a continually updated recruiting network. This network includes a seasoned team of recruiters, competency-based selection standards and the sharing of global best practices in order to advertise and source qualified candidates through proven recruiting techniques. Nonetheless, demand for qualified professionals with the required language and technical skills may still exceed supply at times as new skills are needed to keep pace with the requirements of customer engagements. As such, competition for such personnel is intense and employee turnover in our industry is high.

Executive Officers

The following table provides the names and ages of our executive officers, and the positions and offices currently held by each of them:

Name		Age				Principal Position
Charles E. Sykes			48			President and Chief Executive Officer and Director
W. Michael Kipphut			57			Executive Vice President and Chief Financial Officer
James C. Hobby			60			Executive Vice President, Global Operations
Jenna R. Nelson			47			Executive Vice President, Global Human Resources
Daniel L. Hernandez			44			Executive Vice President, Global Strategy
David L. Pearson			52			Executive Vice President and Chief Information Officer
Lawrence R. Zingale			55			Executive Vice President, Global Sales and Client Management
James T. Holder			52			Executive Vice President, General Counsel and Corporate Secretary
William N. Rocktoff			48			Global Vice President and Corporate Controller

Charles E. Sykes joined SYKES in 1986 and was named President and Chief Executive Officer and Director in August 2004. From July 2003 to August 2004, Mr. Sykes was the Chief Operating Officer. From March 2000 to June 2001, Mr. Sykes was Senior Vice President, Marketing, and in June 2001, he was appointed to the position of General Manager, Senior Vice President — the Americas. From December 1996 to March 2000, he served as Vice President, Sales, and held the position of Regional Manager of the Midwest Region for Professional Services from 1992 until 1996.

W. Michael Kipphut, C.P.A., joined SYKES in March 2000 as Vice President and Chief Financial Officer and was named Senior Vice President and Chief Financial Officer in June 2001. In May 2010, he was named Executive Vice President and Chief Financial Officer. From September 1998 to February 2000, Mr. Kipphut held the position of Vice President and Chief Financial Officer for USA Floral Products, Inc., a publicly-held, worldwide, perishable products distributor. From September 1994 until September 1998, Mr. Kipphut held the position of Vice President and Treasurer for Spalding & Evenflo Companies, Inc., a global manufacturer of consumer products. Previously, Mr. Kipphut held various financial positions, including Vice President and Treasurer, in his 17 years at Tyler Corporation, a publicly-held, diversified holding company.

James C. Hobby joined SYKES in August 2003 as Senior Vice President, the Americas, overseeing the daily operations, administration and development of SYKES’ customer care and enterprise support operations throughout

North America, Latin America, the Asia Pacific Rim and India, and was named Senior Vice President, Global Operations, in January 2005. In May 2010, he was named Executive Vice President, Global Operations. Prior to joining SYKES, Mr. Hobby held several positions at Gateway, Inc., most recently serving as President of Consumer Customer Care since August 1999. From January 1999 to August 1999, Mr. Hobby served as Vice President of European Customer Care for Gateway, Inc. From January 1996 to January 1999, Mr. Hobby served as the Vice President of European Customer Service Centers at American Express. Prior to January 1996, Mr. Hobby held various senior management positions in customer care at FedEx Corporation since 1983, mostly recently serving as Managing Director, European Customer Service Operations.

Jenna R. Nelson joined SYKES in August 1993 and was named Senior Vice President, Human Resources, in July 2001. In May 2010, she was named Executive Vice President, Global Human Resources. From January 2001 until July 2001, Ms. Nelson held the position of Vice President, Human Resources. In August 1998, Ms. Nelson was appointed Vice President, Human Resources, and held the position of Director, Human Resources and Administration, from August 1996 to July 1998. From August 1993 until July 1996, Ms. Nelson served in various management positions within SYKES, including Director of Administration.

Daniel L. Hernandez joined SYKES in October 2003 as Senior Vice President, Global Strategy overseeing marketing, public relations, operational strategy and corporate development efforts worldwide. In May 2010, he was named Executive Vice President, Global Strategy. Prior to joining SYKES, Mr. Hernandez served as President and Chief Executive Officer of SBC Internet Services, a division of SBC Communications Inc., since March 2000. From February 1998 to March 2000, Mr. Hernandez held the position of Vice President/General Manager, Internet and System Operations, at Ameritech Interactive Media Services. Prior to February 1998, Mr. Hernandez held various management positions at US West Communications since joining the telecommunications provider in 1990.

David L. Pearson joined SYKES in February 1997 as Vice President, Engineering, and was named Vice President, Technology Systems Management, in 2000 and Senior Vice President and Chief Information Officer in August 2004. In May 2010, he was named Executive Vice President and Chief Information Officer. Prior to SYKES, Mr. Pearson held various engineering and technical management roles over a fifteen year period, including eight years at Compaq Computer Corporation and five years at Texas Instruments.

Lawrence R. Zingale joined SYKES in January 2006 as Senior Vice President, Global Sales and Client Management. In May 2010, he was named Executive Vice President, Global Sales and Client Management. Prior to joining SYKES, Mr. Zingale served as Executive Vice President and Chief Operating Officer of StarTek, Inc. since 2002. From December 1999 until November 2001, Mr. Zingale served as President of the Americas at Stonehenge Telecom, Inc. From May 1997 until November 1999, Mr. Zingale served as President and Chief Operating Officer of International Community Marketing. From February 1980 until May 1997, Mr. Zingale held various senior level positions at AT&T.

James T. Holder, J.D., C.P.A joined SYKES in December 2000 as General Counsel and was named Corporate Secretary in January 2001, Vice President in January 2004 and Senior Vice President in December 2006. In May 2010, he was named Executive Vice President. From November 1999 until November 2000, Mr. Holder served in a consulting capacity as Special Counsel to Checkers Drive-In Restaurants, Inc., a publicly held restaurant operator and franchisor. From November 1993 until November 1999, Mr. Holder served in various capacities at Checkers including Corporate Secretary, Chief Financial Officer and Senior Vice President and General Counsel.

William N. Rocktoff, C.P.A., joined SYKES in August 1997 as Corporate Controller and was named Treasurer and Corporate Controller in December 1999 and Vice President and Corporate Controller in March 2002. In January 2011, he was named Global Vice President and Corporate Controller. From November 1989 to August 1997, Mr. Rocktoff held various financial positions, including Corporate Controller, at Kimmins Corporation, a publicly-held contracting company.

Item 1A. Risk Factors

Factors Influencing Future Results and Accuracy of Forward-Looking Statements

This Annual Report on Form 10-K contains forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995) that are based on current expectations, estimates, forecasts, and projections about us, our beliefs, and assumptions made by us. In addition, we may make other written or oral statements, which constitute forward-looking statements, from time to time. Words such as “may,” “expects,”

“projects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” variations of such words, and similar expressions are intended to identify such forward-looking statements. Similarly, statements that describe our future plans, objectives or goals also are forward-looking statements. These statements are not guarantees of future performance and are subject to a number of risks and uncertainties, including those discussed below and elsewhere in this Annual Report on Form 10-K. Our actual results may differ materially from what is expressed or forecasted in such forward-looking statements, and undue reliance should not be placed on such statements. All forward-looking statements are made as of the date hereof, and we undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

Factors that could cause actual results to differ materially from what is expressed or forecasted in such forward-looking statements include, but are not limited to: the marketplace’s continued receptivity to our terms and elements of services offered under our standardized contract for future bundled service offerings; our ability to continue the growth of our service revenues through additional customer contact management centers; our ability to further penetrate into vertically integrated markets; our ability to expand revenues within the global markets; our ability to continue to establish a competitive advantage through sophisticated technological capabilities, and the following risk factors:

Risks Related to Our Business and Industry

Unfavorable general economic conditions could negatively impact our operating results and financial condition.

Unfavorable general economic conditions could negatively affect our business. While it is often difficult to predict the impact of general economic conditions on our business, these conditions could adversely affect the demand for some of our client’s products and services and, in turn, could cause a decline in the demand for our services. Also, our clients may not be able to obtain adequate access to credit, which could affect their ability to make timely payments to us. If that were to occur, we could be required to increase our allowance for doubtful accounts, and the number of days outstanding for our accounts receivable could increase. In addition, we may not be able to renew our revolving credit facility at terms that are as favorable as those terms available under our current credit facility. Also, the group of lenders under our credit facility may not be able to fulfill their funding obligations, which could adversely impact our liquidity. For these reasons, among others, if the current economic conditions persist or decline, this could adversely affect our revenues, operating results and financial condition, as well as our ability to access debt under comparable terms and conditions.

Our business is dependent on key clients, and the loss of a key client could adversely affect our business and results of operations.

We derive a substantial portion of our revenues from a few key clients. Our top ten clients accounted for approximately 41% of our consolidated revenues in 2010. The loss of (or the failure to retain a significant amount of business with) any of our key clients could have a material adverse effect on our business, financial condition and results of operations. Many of our contracts contain penalty provisions for failure to meet minimum service levels and are cancelable by the client at any time or on short-term notice. Also, clients may unilaterally reduce their use of our services under these contracts without penalty. Thus, our contracts with our clients do not ensure that we will generate a minimum level of revenues.

Improper disclosure or control of personal information could result in liability and harm our reputation, which could adversely affect our business and results of operations.

Our business involves the use, storage and transmission of information about our employees, our clients and customers of our clients. While we take measures to protect the security and privacy of this information and to prevent unauthorized access, it is possible that our security controls over personal data and other practices we follow may not prevent the improper access to or disclosure of personally identifiable information. Such disclosure could harm our reputation and subject us to liability under our contracts and laws that protect personal data, resulting in increased costs or loss of revenue. Further, data privacy is subject to frequently changing rules and regulations, which sometimes conflict among the various jurisdictions and countries in which we provide services. Our failure to adhere to or successfully implement processes in response to changing regulatory requirements in this area could result in legal liability or impairment to our reputation in the marketplace, which could have a material adverse effect on our business, financial condition and results of operations.

Our business is subject to substantial competition.

The markets for many of our services operate on a commoditized basis and are highly competitive and subject to rapid change. While many companies provide outsourced customer contact management services, we believe no one company is dominant in the industry. There are numerous and varied providers of our services, including firms specializing in call center operations, temporary staffing and personnel placement, consulting and integration firms, and niche providers of outsourced customer contact management services, many of whom compete in only certain markets. Our competitors include both companies who possess greater resources and name recognition than we do, as well as small niche providers that have few assets and regionalized (local) name recognition instead of global name recognition. In addition to our competitors, many companies who might utilize our services or the services of one of our competitors may utilize in-house personnel to perform such services. Increased competition, our failure to compete successfully, pricing pressures, loss of market share and loss of clients could have a material adverse effect on our business, financial condition and results of operations.

Many of our large clients purchase outsourced customer contact management services from multiple preferred vendors. We have experienced and continue to anticipate significant pricing pressure from these clients in order to remain a preferred vendor. These companies also require vendors to be able to provide services in multiple locations. Although we believe we can effectively meet our clients’ demands, there can be no assurance that we will be able to compete effectively with other outsourced customer contact management services companies on price. We believe that the most significant competitive factors in the sale of our core services include the standard requirements of service quality, tailored value-added service offerings, industry experience, advanced technological capabilities, global coverage, reliability, scalability, security, price and financial strength.

Our business is dependent on the trend toward outsourcing.

Our business and growth depend in large part on the industry trend toward outsourced customer contact management services. Outsourcing means that an entity contracts with a third party, such as us, to provide customer contact services rather than perform such services in-house. There can be no assurance that this trend will continue, as organizations may elect to perform such services themselves. A significant change in this trend could have a material adverse effect on our business, financial condition and results of operations. Additionally, there can be no assurance that our cross-selling efforts will cause clients to purchase additional services from us or adopt a single-source outsourcing approach.

We are subject to various uncertainties relating to future litigation.

We cannot predict whether any material suits, claims, or investigations may arise in the future. Regardless of the outcome of any future actions, claims, or investigations, we may incur substantial defense costs and such actions may cause a diversion of management time and attention. Also, it is possible that we may be required to pay substantial damages or settlement costs which could have a material adverse effect on our financial condition and results of operations.

Our industry is subject to rapid technological change which could affect our business and results of operations.

Rapid technological advances, frequent new product introductions and enhancements, and changes in client requirements characterize the market for outsourced customer contact management services. Technological advancements in voice recognition software, as well as self-provisioning and self-help software, along with call avoidance technologies, have the potential to adversely impact call volume growth and, therefore, revenues. Our future success will depend in large part on our ability to service new products, platforms and rapidly changing technology. These factors will require us to provide adequately trained personnel to address the increasingly sophisticated, complex and evolving needs of our clients. In addition, our ability to capitalize on our acquisitions will depend on our ability to continually enhance software and services and adapt such software to new hardware and operating system requirements. Any failure by us to anticipate or respond rapidly to technological advances, new products and enhancements, or changes in client requirements could have a material adverse effect on our business, financial condition and results of operations.

Our business relies heavily on technology and computer systems, which subjects us to various uncertainties.

We have invested significantly in sophisticated and specialized communications and computer technology and have focused on the application of this technology to meet our clients’ needs. We anticipate that it will be necessary to

continue to invest in and develop new and enhanced technology on a timely basis to maintain our competitiveness. Significant capital expenditures may be required to keep our technology up-to-date. There can be no assurance that any of our information systems will be adequate to meet our future needs or that we will be able to incorporate new technology to enhance and develop our existing services. Moreover, investments in technology, including future investments in upgrades and enhancements to software, may not necessarily maintain our competitiveness. Our future success will also depend in part on our ability to anticipate and develop information technology solutions that keep pace with evolving industry standards and changing client demands.

Emergency interruption of customer contact management center operations could affect our business and results of operations.

Our operations are dependent upon our ability to protect our customer contact management centers and our information databases against damage that may be caused by fire, earthquakes, severe weather and other disasters, power failure, telecommunications failures, unauthorized intrusion, computer viruses and other emergencies. The temporary or permanent loss of such systems could have a material adverse effect on our business, financial condition and results of operations. Notwithstanding precautions taken to protect us and our clients from events that could interrupt delivery of services, there can be no assurance that a fire, natural disaster, human error, equipment malfunction or inadequacy, or other event would not result in a prolonged interruption in our ability to provide services to our clients. Such an event could have a material adverse effect on our business, financial condition and results of operations.

Our operating results will be adversely affected if we are unable to maximize our facility capacity utilization.

Our profitability is significantly influenced by our ability to effectively manage our contact center capacity utilization. The majority of our business involves technical support and customer care services initiated by our clients’ customers, and as a result, our capacity utilization varies and demands on our capacity are, to some degree, beyond our control. In order to create the additional capacity necessary to accommodate new or expanded outsourcing projects, we may need to open new contact centers. The opening or expansion of a contact center may result, at least in the short term, in idle capacity until we fully implement the new or expanded program. Additionally, the occasional need to open customer contact centers fully, or primarily, dedicated to a single client, instead of spreading the work among existing facilities with idle capacity, negatively affects capacity utilization. We periodically assess the expected long-term capacity utilization of our contact centers. As a result, we may, if deemed necessary, consolidate, close or partially close under-performing contact centers to maintain or improve targeted utilization and margins. There can be no guarantee that we will be able to achieve or maintain optimal utilization of our contact center capacity.

As part of our effort to consolidate our facilities, we may seek to sell or sublease a portion of our surplus contact center space, if any, and recover certain costs associated with it. Failure to sell or sublease such surplus space will negatively impact results of operations.

Increases in the cost of telephone and data services or significant interruptions in such services could adversely affect our business.

Our business is significantly dependent on telephone and data service provided by various local and long distance telephone companies. Accordingly, any disruption of these services could adversely affect our business. We have taken steps to mitigate our exposure to service disruptions by investing in redundant circuits, although there is no assurance that the redundant circuits would not also suffer disruption. Any inability to obtain telephone or data services at favorable rates could negatively affect our business results. Where possible, we have entered into long-term contracts with various providers to mitigate short term rate increases and fluctuations. There is no obligation, however, for the vendors to renew their contracts with us, or to offer the same or lower rates in the future, and such contracts are subject to termination or modification for various reasons outside of our control. A significant increase in the cost of telephone services that is not recoverable through an increase in the price of our services could adversely affect our business.

Our profitability may be adversely affected if we are unable to maintain and find new locations for customer contact centers in countries with stable wage rates.

Our business is labor-intensive and therefore wages, employee benefits and employment taxes constitute the largest component of our operating expenses. As a result, expansion of our business is dependent upon our ability to find cost-effective locations in which to operate, both domestically and internationally. Some of our customer contact centers are located in countries that have experienced inflation and rising standards of living, which requires us to increase employee wages. In addition, collective bargaining is being utilized in an increasing number of countries in which we currently, or may in the future, desire to operate. Collective bargaining may result in material wage and benefit increases. If wage rates and benefits increase significantly in a country where we deliver offshore services, we may not be able to pass those increased labor costs on to our clients, requiring us to search for other cost effective delivery locations. There is no assurance that we will be able to find such cost-effective locations, and even if we do, the costs of closing delivery locations and opening new customer contact centers can adversely affect our financial results.

Risks Related to Our International Operations

Our international operations and expansion involve various risks.

We intend to continue to pursue growth opportunities in markets outside the United States. At December 31, 2010, our international operations in EMEA, India and the Asia Pacific Rim were conducted from 39 customer contact management centers located in Sweden, the Netherlands, Finland, Germany, Egypt, South Africa, Scotland, Ireland, Denmark, Norway, Hungary, Romania, Slovakia, Spain, India, The Peoples Republic of China, Australia and the Philippines. Revenues from these international operations for the years ended December 31, 2010, 2009, and 2008, were 44%, 55%, and 60% of consolidated revenues, respectively. We also conduct business from 17 customer contact management centers located in Canada, Costa Rica, El Salvador, Mexico and Brazil. International operations are subject to certain risks common to international activities, such as changes in foreign governmental regulations, tariffs and taxes, import/export license requirements, the imposition of trade barriers, difficulties in staffing and managing international operations, political uncertainties, longer payment cycles, possible greater difficulties in accounts receivable collection, economic instability as well as political and country-specific risks.

Additionally, we have been granted tax holidays in the Philippines, Costa Rica, El Salvador and India which expire at varying dates from 2011 through 2018. In some cases, the tax holidays expire without possibility of renewal. In other cases, we expect to renew these tax holidays, but there are no assurances from the respective foreign governments that they will renew them. This could potentially result in adverse tax consequences. Any one or more of these factors could have an adverse effect on our international operations and, consequently, on our business, financial condition and results of operations.

As of December 31, 2010, we had cash balances of approximately $173.9 million (excluding restricted cash of $0.5 million) held in international operations, some of which would be subject to additional taxes if repatriated to the United States.

The U.S. Department of the Treasury released the “General Explanations of the Administration’s Fiscal Year 2012 Revenue Proposals” in February 2011. These proposals represent a significant shift in international tax policy, which may materially impact U.S. taxation of international earnings. We continue to monitor these proposals and are currently evaluating their potential impact on our financial condition, results of operations, and cash flows. Determination of any unrecognized deferred tax liability for temporary differences related to investments in foreign subsidiaries that are essentially permanent in nature is not practicable.

We conduct business in various foreign currencies and are therefore exposed to market risk from changes in foreign currency exchange rates and interest rates, which could impact our results of operations and financial condition. We are also subject to certain exposures arising from the translation and consolidation of the financial results of our foreign subsidiaries. We have, from time to time, taken limited actions, such as using foreign currency forward contracts, to attempt to mitigate our currency exchange exposure. However, there can be no assurance that we will take any actions to mitigate such exposure in the future, and if taken, that such actions will be successful or that future changes in currency exchange rates will not have a material adverse impact on our future operating results. A significant change in the value of the U.S. Dollar against the currency of one or more countries where we operate may have a material adverse effect on our financial condition and results of operations.

The fundamental shift in our industry toward global service delivery markets presents various risks to our business.

Clients continue to require blended delivery models using a combination of onshore and offshore support. Our offshore delivery locations include The Peoples Republic of China, Australia, the Philippines, India, Mexico, Costa Rica, El Salvador and Brazil, and while we have operated in global delivery markets since 1996, there can be no assurance that we will be able to successfully conduct and expand such operations, and a failure to do so could have a material adverse effect on our business, financial condition, and results of operations. The success of our offshore operations will be subject to numerous contingencies, some of which are beyond our control, including general and regional economic conditions, prices for our services, competition, changes in regulation and other risks. In addition, as with all of our operations outside of the United States, we are subject to various additional political, economic and market uncertainties (see “Our international operations and expansion involve various risks”). Additionally, a change in the political environment in the United States or the adoption and enforcement of legislation and regulations curbing the use of offshore customer contact management solutions and services could effectively have a material adverse effect on our business, financial condition and results of operations.

Our global operations expose us to numerous legal and regulatory requirements.

We provide services to our clients’ customers in 24 countries around the world. Accordingly, we are subject to numerous legal regimes on matters such as taxation, government sanctions, content requirements, licensing, tariffs, government affairs, data privacy and immigration as well as internal and disclosure control obligations. In the U.S., as well as several of the other countries in which we operate, some of our services must comply with various laws and regulations regarding the method and timing of placing outbound telephone calls. Violations of these various laws and regulations could result in liability for monetary damages, fines and/or criminal prosecution and unfavorable publicity. Changes in U.S. federal, state and international laws and regulations, specifically those relating to the outsourcing of jobs to foreign countries, may adversely affect our ability to perform our services at our overseas facilities or could result in additional taxes on such services, thereby threatening our ability to continue to serve certain markets at offshore locations.

Risks Related to Our Employees

Our operations are substantially dependent on our senior management.

Our success is largely dependent upon the efforts, direction and guidance of our senior management. Our growth and success also depend in part on our ability to attract and retain skilled employees and managers and on the ability of our executive officers and key employees to manage our operations successfully. We have entered into employment and non-competition agreements with our executive officers. The loss of any of our senior management or key personnel, or the inability to attract, retain or replace key management personnel in the future, could have a material adverse effect on our business, financial condition and results of operations.

Our inability to attract and retain experienced personnel may adversely impact our business.

Our business is labor intensive and places significant importance on our ability to recruit, train, and retain qualified technical and consultative professional personnel. We generally experience high turnover of our personnel and are continuously required to recruit and train replacement personnel as a result of a changing and expanding work force. Additionally, demand for qualified technical professionals conversant in multiple languages, including English, and/or certain technologies may exceed supply, as new and additional skills are required to keep pace with evolving computer technology. Our ability to locate and train employees is critical to achieving our growth objective. Our inability to attract and retain qualified personnel or an increase in wages or other costs of attracting, training, or retaining qualified personnel could have a material adverse effect on our business, financial condition and results of operations.

Health epidemics could disrupt our business and adversely affect our financial results.

Our customer contact centers typically seat hundreds of employees in one location. Accordingly, an outbreak of a contagious infection in one or more of the markets in which we do business may result in significant worker absenteeism, lower asset utilization rates, voluntary or mandatory closure of our offices and delivery centers, travel restrictions on our employees, and other disruptions to our business. Any prolonged or widespread health epidemic

could severely disrupt our business operations and have a material adverse effect on our business, financial condition and results of operations.

Risks Related to Our Growth Strategy

Our strategy of growing through selective acquisitions and mergers involves potential risks.

We evaluate opportunities to expand the scope of our services through acquisitions and mergers. We may be unable to identify companies that complement our strategies, and even if we identify a company that complements our strategies, we may be unable to acquire or merge with the company. In addition, a decrease in the price of our common stock could hinder our growth strategy by limiting growth through acquisitions funded with SYKES’ stock.

Our acquisition strategy involves other potential risks. These risks include:

§		The inability to obtain the capital required to finance potential acquisitions on satisfactory terms;
§		The diversion of our attention to the integration of the businesses to be acquired;
§		The risk that the acquired businesses will fail to maintain the quality of services that we have historically provided;
§		The need to implement financial and other systems and add management resources;
§		The risk that key employees of the acquired business will leave after the acquisition;
§		Potential liabilities of the acquired business;
§		Unforeseen difficulties in the acquired operations;
§		Adverse short-term effects on our operating results;
§		Lack of success in assimilating or integrating the operations of acquired businesses within our business;
§		The dilutive effect of the issuance of additional equity securities;
§		The impairment of goodwill and other intangible assets involved in any acquisitions;
§		The businesses we acquire not proving profitable; and
§		Potentially incurring additional indebtedness.

We may not succeed in our continued efforts to fully integrate the operations of ICT into our own, which may adversely affect the value of our common stock.

It is possible that the integration of the operations of ICT into our own could result in the disruption of ongoing businesses or identify inconsistencies in standards, controls, procedures and policies that adversely affect our ability to maintain relationships with customers, suppliers, distributors, creditors and lessors, or to achieve the full level of anticipated benefits of the acquisition.

Specifically, issues addressed in completing the integration of the operations of ICT into our own operations in order to realize the anticipated benefits of the acquisition include, among other things:

§		integrating our information technology systems with those of ICT;
§		conforming standards, controls, procedures and policies, business cultures and compensation structures between the companies;
§		consolidating corporate and administrative infrastructures;
§		retaining existing customers and attracting new customers;
§		identifying and eliminating redundant and underperforming operations and assets;
§		coordinating geographically dispersed organizations;
§		managing tax costs or inefficiencies associated with integrating the operations of the combined company; and
§		making any necessary modifications to operating control standards to comply with the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated thereunder.

Integration efforts between the two companies at times may divert management attention and resources. An inability to realize the full extent of, or any of, the anticipated benefits of the acquisition, as well as any delays encountered in the integration process, could have an adverse effect on our business and results of operations, which may affect the value of the shares of our common stock.

In addition, the actual integration may result in additional and unforeseen expenses, and the full amount of anticipated benefits of the integration plan may not be realized. If we are not able to adequately address these

Additionally, the recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) will subject us to significant additional executive compensation and corporate governance requirements and disclosures, some of which have yet to be implemented by the SEC. Compliance with their requirements may be costly and adversely affect our business. The Dodd-Frank Act also anticipates the enactment of regulations that may affect the ability of financial institutions to offer credit and hedging instruments without significant additional capital or other costs to them. This may make it more difficult for us to have access to foreign exchange hedging transactions on favorable terms, which may limit the predictability of cash flows from operations and result in increased operating expenses.

Item 1B. Unresolved Staff Comments

There are no material unresolved written comments that were received from the SEC staff 180 days or more before the year ended December 31, 2010 relating to our periodic or current reports filed under the Securities Exchange Act of 1934.

Item 2. Properties

Our principal executive offices are located in Tampa, Florida. This facility currently serves as the headquarters for senior management and the financial, information technology and administrative departments. We believe our existing facilities are adequate to meet current requirements, and that suitable additional or substitute space will be available as needed to accommodate any physical expansion or any space required due to expiring leases not renewed. We operate from time to time in temporary facilities to accommodate growth before new customer contact management centers are available. During 2010, our customer contact management centers, taken as a whole, were utilized at average capacities of approximately 77% and were capable of supporting a higher level of market demand. The following table sets forth additional information concerning our facilities:

								Lease Expiration/
Properties		General Usage			Square Feet			Company Owned
AMERICAS LOCATIONS
Tampa, Florida		Corporate headquarters			67,645			June 2016
Nogales, Arizona		Customer contact management center			44,402			January 2015
Conway, Arkansas		Customer contact management center			14,785			March 2012
Fort Smith, Arkansas		Customer contact management center			40,622			April 2021
Malvern, Arkansas		Customer contact management center			32,287			May 2019
Morrilton, Arkansas		Customer contact management center			23,850			July 2011
Sterling, Colorado		Customer contact management center			34,000			Company owned
Lakeland, Florida		Customer contact management center			50,000			July 2014
Louisville, Kentucky		Customer contact management center			36,860			May 2012
Morganfield, Kentucky		Customer contact management center			42,000			Company owned
Perry County, Kentucky		Customer contact management center			42,000			Company owned
Wilton, Maine		Customer contact management center			30,000			October 2011
Amherst, New York		Customer contact management center			26,296			May 2013
Bismarck, North Dakota		Customer contact management center			42,000			Company owned
Minot, North Dakota		Customer contact management center (1)			42,000			Company owned
Ponca City, Oklahoma		Customer contact management center			42,000			Company owned
Milton-Freewater, Oregon		Customer contact management center			42,000			Company owned
Allentown, Pennsylvania		Customer contact management center			21,115			February 2013
Bloomburg, Pennsylvania		Customer contact management center			21,800			July 2014
Langhorn, Pennsylvania		Customer contact management center			21,641			March 2012
Langhorn, Pennsylvania		Customer contact management center			14,060			September 2012
Langhorn, Pennsylvania		Customer contact management center			1,396			June 2012
Lockhaven, Pennsylvania		Customer contact management center			23,610			August 2011
Newtown, Pennsylvania		Customer contact management center			102,000			February 2017
Bardstown, South Carolina		Customer contact management center			35,813			September 2019
Greenwood, South Carolina		Customer contact management center			25,000			December 2012
Greenwood, South Carolina		Customer contact management center			15,000			October 2011
Kingstree, South Carolina		Customer contact management center			35,000			March 2028
Sumter, South Carolina		Customer contact management center			25,000			April 2014
Sumter, South Carolina		Customer contact management center			10,993			September 2013
Sumter, South Carolina		Customer contact management center			2,141			April 2011
Buchanan County, Virginia		Customer contact management center			42,700			Company owned
Wise, Virginia		Customer contact management center			42,000			Company owned
Spokane, Washington		Customer contact management center			50,000			July 2013
Maitland, Australia		Customer contact management center			10,613			September 2012

								Lease Expiration/
Properties		General Usage			Square Feet			Company Owned
AMERICAS LOCATIONS (continued)
Rhodes (Sydney), Australia		Customer contact management center			9,363			September 2012
Robina, Australia		Customer contact management center			4,757			February 2012
Curitiba, Brazil		Customer contact management center			25,658			July 2012
London, Ontario, Canada		Headquarters			50,000			Company owned
Bathurst, New Brunswick, Canada		Customer contact management center (2)			1,856			December 2012
Moncton, New Brunswick, Canada		Customer contact management center (2)			12,714			December 2011
North Bay, Ontario, Canada		Customer contact management center (2)			5,371			May 2012
Sudbury, Ontario, Canada		Customer contact management center (2)			3,514			December 2015
Toronto, Ontario, Canada		Customer contact management center (2)			14,600			June 2012
Cornerbrook, New Foundland Labrador, Canada		Customer contact management center			25,032			June 2011
Lindsay, Ontario, Canada		Customer contact management center			15,338			February 2012
Miramichi, New Brunswick, Canada		Customer contact management center			30,000			May 2012
Peterborough, Ontario, Canada		Customer contact management center			17,000			January 2016
Riverview, New Brunswick, Canada		Customer contact management center			49,017			June 2012
Sherebrook, Quebec, Canada		Customer contact management center			32,500			January 2012
St. John, New Brunswick, Canada		Customer contact management center			25,000			February 2015
St. John’s, New Foundland Labrador, Canada		Customer contact management center			49,000			August 2011
Sydney, Nova Scotia, Canada		Customer contact management center			27,200			February 2016
LaAurora, Heredia, Costa Rica		Customer contact management center			33,635			August 2011
LaAurora, Heredia, Costa Rica (three)		Customer contact management centers			131,912			September 2023
Moravia, San Jose, Costa Rica		Customer contact management center			38,480			July 2027
San Salvador, El Salvador		Customer contact management center			119,836			November 2024
Hyderabad, India		Customer contact management center			16,000			June 2014
Mexico City, Mexico		Customer contact management center			59,503			November 2014
Guangzhou, The Peoples Republic of China		Customer contact management center			12,970			March 2012
Shanghai, The Peoples Republic of China		Customer contact management center			70,474			February 2016
Cabanatuan, The Philippines		Customer contact management center			43,055			June 2011
Cebu City, The Philippines		Customer contact management center			149,402			December 2026
Makati City, The Philippines		Customer contact management center			68,610			March 2023
Makati City, The Philippines		Customer contact management center			68,268			September 2011
Mandaluyong, The Philippines		Customer contact management center			104,299			April 2012
Marikina City, The Philippines		Customer contact management center			74,525			March 2012
Marikina City, The Philippines		Customer contact management center			87,273			June 2012
Pasig City, The Philippines		Customer contact management center			127,449			November 2023
Pasig City, The Philippines		Customer contact management center			73,872			September 2012
Pasig City, The Philippines		Customer contact management center			1,917			August 2011
Quezon City, The Philippines		Customer contact management center			84,250			May 2024
Wilmington, Delaware		Office			4,344			January 2014
Chesterfield, Missouri		Office (3)			3,600			January 2016
Cary, North Carolina		Office (3)			1,200			March 2011
Arlington, Virginia		Office			200			March 2012
Ajax, Ontario, Canada		Office			200			April 2011
Calgary, Alberta, Canada		Office			7,782			July 2012
Halifax, Nova Scotia, Canada		Office			2,818			January 2013
Bangalore, India		Office			1,500			January 2014

								Lease Expiration/
Properties		General Usage			Square Feet			Company Owned
EMEA LOCATIONS
Odense, Denmark		Customer contact management center			13,605			January 2016
Cairo, Egypt		Customer contact management center			27,935			January 2013
Uxbridge, England		Customer contact management center (4)			26,155			January 2012
Turku, Finland		Customer contact management center			12,507			February 2012
Berlin, Germany		Customer contact management center			60,278			February 2020
Bochum, Germany		Customer contact management center			41,334			December 2011
Pasewalk, Germany		Customer contact management center			46,069			February 2012
Wilhelmshaven, Germany		Customer contact management center			46,000			November 2011
Wilhelmshaven, Germany		Customer contact management center			14,300			August 2011
Budapest, Hungary		Customer contact management center			22,819			July 2023
Dublin, Ireland		Customer contact management center (4)			9,845			May 2024
Shannon, Ireland		Customer contact management center			66,000			March 2013
Bergen, Norway		Customer contact management center			8,654			August 2015
Bodo, Norway		Customer contact management center			3,203			February 2012
Cluj, Romania		Customer contact management center			32,055			April 2030
Edinburgh, Scotland		Customer contact management center/ Office/Headquarters			35,870			September 2019
Edinburgh, Scotland		Customer contact management center			8,998			February 2012
Kosice, Slovakia		Customer contact management center			40,028			December 2024
Johannesburg, South Africa		Customer contact management center			21,692			March 2025
La Coruña, Spain		Customer contact management center			10,314			December 2011
Lugo, Spain		Customer contact management center			21,441			June 2011
Ponferrada, Spain		Customer contact management center			16,146			December 2028
Ed, Sweden		Customer contact management center			44,060			September 2019
Sveg, Sweden		Customer contact management center			34,974			June 2012
Amsterdam, The Netherlands		Customer contact management center			33,088			September 2012
Galashiels, Scotland		Fulfillment center			126,700			Company owned
Rosersberg, Sweden		Fulfillment center and Sales office			43,056			February 2012
Frankfurt, Germany		Sales office			1,700			September 2011
Madrid, Spain		Office			127			February 2012

Item 3. Legal Proceedings

From time to time, we are involved in legal actions arising in the ordinary course of business. With respect to these matters, we believe that we have adequate legal defenses and/or when possible and appropriate, have provided adequate accruals related to those matters such that the ultimate outcome will not have a material adverse effect on our future financial position or results of operations.

We have previously disclosed three pending matters involving regulatory sanctions assessed against our Spanish subsidiary. All three matters relate to the alleged inappropriate acquisition of personal information in connection with two outbound client contracts. In connection with the appeal of one of these claims, we issued a bank guarantee, which is included as restricted cash of $0.4 million and $0.5 million in “Deferred charges and other assets” in the accompanying Consolidated Balance Sheets as of December 31, 2010 and 2009, respectively. Based upon the opinion of legal counsel regarding the likely outcome of these three matters, we accrued a liability in the amount of $1.3 million in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification 450 “Contingencies” because we believed that a loss was probable and the amount of the loss could be reasonably estimated. In the quarter ended December 31, 2010, the Spanish Supreme Court ruled in our favor in one of the three subject claims. Accordingly, we have reversed the accrual in the amount of $0.5 million related to that particular claim. The accrued liability included in “Other accrued expenses and current liabilities” in the accompanying Consolidated Balance Sheets was $0.8 million and $1.3 million as of December 31, 2010 and 2009, respectively. One of the other two claims has been finally decided against the Company on procedural grounds, and the final claim remains on appeal to the Spanish Supreme Court.

Item 4. Reserved

PART II

Item 5. Market for the Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Securities

Our common stock is quoted on the NASDAQ Global Select Market under the symbol SYKE. The following table sets forth, for the periods indicated, certain information as to the high and low sale prices per share of our common stock as quoted on the NASDAQ Global Select Market.

		High				Low
Year Ended December 31, 2010:
Fourth Quarter		$	21.68			$	13.49
Third Quarter			16.70				10.85
Second Quarter			23.46				14.21
First Quarter			26.26				22.59
Year Ended December 31, 2009:
Fourth Quarter		$	26.91			$	20.00
Third Quarter			22.17				17.50
Second Quarter			20.45				15.84
First Quarter			19.98				13.16

Holders of our common stock are entitled to receive dividends out of the funds legally available when and if declared by the Board of Directors. We have not declared or paid any cash dividends on our common stock in the past and do not anticipate paying any cash dividends in the foreseeable future.

As of February 28, 2011, there were 1,012 holders of record of the common stock. We estimate there were approximately 4,848 beneficial owners of our common stock.

Below is a summary of stock repurchases for the quarter ended December 31, 2010 (in thousands, except average price per share.) See Note 22, Earnings Per Share, of “Notes to Consolidated Financial Statements” for further information regarding our stock repurchase program.

Total Number of

Maximum Number

Total

Average

Shares Purchased

of Shares That May

Number of

Price

as Part of Publicly

Yet Be Purchased

Shares

Paid Per

Announced Plans

Under Plans or

Period

Purchased(1)

Share

or Programs

Programs

October 1, 2010 - October 31, 2010

-

-

-

798

November 1, 2010 - November 30, 2010

-

-

-

798

December 1, 2010 - December 31, 2010

-

-

-

798

Total

-

-

798

Five-Year Stock Performance Graph

The following graph presents a comparison of the cumulative shareholder return on the common stock with the cumulative total return on the NASDAQ Computer and Data Processing Services Index, the NASDAQ Telecommunications Index, the Russell 2000 Index, the S&P Small Cap 600 and the SYKES Peer Group (as defined below). The SYKES Peer Group is comprised of publicly traded companies that derive a substantial portion of their revenues from call center, customer care business, have similar business models to SYKES, and are those most commonly compared to SYKES by industry analysts following SYKES. This graph assumes that $100 was invested on December 31, 2005 in SYKES common stock, the NASDAQ Computer and Data Processing Services Index, the NASDAQ Telecommunications Index, the Russell 2000 Index, the S&P Small Cap 600 and SYKES Peer Group, including reinvestment of dividends.

Comparison of Five-Year Cumulative Total Return

SYKES Peer Group		Ticker Symbol
APAC Customer Service, Inc.		APAC
Convergys Corp.		CVG
StarTek, Inc.		SRT
TeleTech Holdings, Inc.		TTEC

There was a change to the SYKES Peer Group with respect to ICT in 2010. With the acquisition of ICT on February 2, 2010, by SYKES, the Peer Group excludes the share price performance of ICT for the past 5 years as ICT shares no longer trade on NASDAQ.

There can be no assurance that SYKES’ stock performance will continue into the future with the same or similar trends depicted in the graph above. SYKES does not make or endorse any predictions as to the future stock performance.

The information contained in the Stock Performance Graph section shall not be deemed to be “soliciting material” or “filed” or incorporated by reference in future filings with the SEC, or subject to the liabilities of Section 18 of the Securities Exchange Act of 1934, except to the extent that we specifically incorporate it by reference into a document filed under the Securities Exchange Act of 1934.

Item 6. Selected Financial Data

Selected Financial Data

The following selected financial data has been derived from our Consolidated Financial Statements. During the year ended December 31, 2010, we sold our Argentine operations; this transaction was accounted for in accordance with Accounting Standards Codification 205-20 “Discontinued Operations”. We have reclassified the selected financial data for all periods presented to reflect the operations of our Argentine operations as discontinued operations. See Note 3, Discontinued Operations, of “Notes to Consolidated Financial Statements” for more information.

The information below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our Consolidated Financial Statements and related notes thereto.

		Years Ended December 31,
(in thousands, except per share data)		2010				2009				2008				2007				2006
Income Statement Data: (1,3)
Revenues		$	1,158,718			$	813,574			$	782,295			$	683,189			$	559,106
Income from continuing operations (2,4,6,7)			32,223				73,018				67,511				53,164				44,336
Income from continuing operations, net of taxes (2,4,5,6,7)			19,698				46,142				62,651				41,757				41,804
Income (loss) from discontinued operations, net of taxes (3)			(29,971	)			(2,931	)			(2,090	)			(1,898	)			519
Net income (loss)			(10,273	)			43,211				60,561				39,859				42,323
Net Income (Loss) Per Common Share: (1,2,4,5,6,7)
Basic:
Continuing operations		$	0.43			$	1.13			$	1.54			$	1.03			$	1.05
Discontinued operations (3)			(0.65	)			(0.07	)			(0.05	)			(0.04	)			0.01
Net income (loss) per common share		$	(0.22	)		$	1.06			$	1.49			$	0.99			$	1.06
Diluted:
Continuing operations		$	0.43			$	1.12			$	1.53			$	1.03			$	1.04
Discontinued operations (3)			(0.65	)			(0.07	)			(0.05	)			(0.05	)			0.01
Net income (loss) per common share		$	(0.22	)		$	1.05			$	1.48			$	0.98			$	1.05
Weighted Average Shares: (1)
Basic			46,030				40,707				40,618				40,387				39,829
Diluted			46,133				41,026				40,961				40,699				40,219
Balance Sheet Data: (1,8)
Total assets		$	794,600			$	672,471			$	529,542			$	505,475			$	415,573
Shareholders’ equity			583,195				450,674				384,030				365,321				291,473

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This discussion should be read in conjunction with the Consolidated Financial Statements and the notes thereto that appear elsewhere in this Annual Report on Form 10-K. The following discussion and analysis compares the year ended December 31, 2010 (“2010”) to the year ended December 31, 2009 (“2009”), and 2009 to the year ended December 31, 2008 (“2008”).

The following discussion and analysis and other sections of this document contain forward-looking statements that involve risks and uncertainties. Words such as “may,” “expects,” “projects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” variations of such words, and similar expressions are intended to identify such forward-looking statements. Similarly, statements that describe our future plans, objectives, or goals also are forward-looking statements. Future events and actual results could differ materially from the results reflected in these forward-looking statements, as a result of certain of the factors set forth below and elsewhere in this analysis and in this Annual Report on Form 10-K for the year ended December 31, 2010 in Item 1.A., “Risk Factors.”

Overview

We provide an array of sophisticated customer contact management solutions to a wide range of clients including Fortune 1000 companies, medium-sized businesses, and public institutions around the world, primarily in the communications, financial services, technology/consumer, transportation and leisure, healthcare and other industries. We serve our clients through two geographic operating regions: the Americas (United States, Canada, Latin America, India and the Asia Pacific Rim) and EMEA (Europe, the Middle East and Africa). Our Americas and EMEA groups primarily provide customer contact management services (with an emphasis on inbound technical support and customer service), which include customer assistance, healthcare and roadside assistance, technical support and product sales to our client’s customers. These services, which represented 98% of consolidated revenues in 2010, are delivered through multiple communication channels encompassing phone, e-mail, Internet, text messaging and chat. We also provide various enterprise support services in the United States (“U.S.”) that include services for our client’s internal support operations, from technical staffing services to outsourced corporate help desk services. In Europe, we also provide fulfillment services including multilingual sales order processing via the Internet and phone, payment processing, inventory control, product delivery, and product returns handling. Our complete service offering helps our clients acquire, retain and increase the lifetime value of their customer relationships. We have developed an extensive global reach with customer contact management centers throughout the United States, Canada, Europe, Latin America, Asia, India and Africa. With the acquisition of ICT and our organic growth, net of the sale of our Argentine operations, we added 34 customer contact management centers and increased our footprint by three countries, with the addition of Mexico, Australia and India, in 2010.

Revenues from these services is recognized as the services are performed, which is based on either a per minute, per hour, per call or per transaction basis, under a fully executed contractual agreement, and we record reductions to revenues for contractual penalties and holdbacks for a failure to meet specified minimum service levels and other performance based contingencies. Revenue recognition is limited to the amount that is not contingent upon delivery of any future product or service or meeting other specified performance conditions. Product sales, accounted for within our fulfillment services, are recognized upon shipment to the customer and satisfaction of all obligations.

Recognition of income associated with grants from local or state governments of land and the acquisition of property, buildings and equipment is deferred and recognized as a reduction of depreciation expense included within general and administrative costs over the corresponding useful lives of the related assets. Amounts received in excess of the cost of the building are allocated to equipment and, only after the grants are released from escrow, recognized as a reduction of depreciation expense over the weighted average useful life of the related equipment, which approximates five years. Deferred property and equipment grants, net of amortization, totaled $10.8 million and $11.0 million at December 31, 2010 and 2009, respectively, a decrease of $0.2 million.

Direct salaries and related costs include direct personnel compensation, severance, statutory and other benefits associated with such personnel and other direct costs associated with providing services to customers. General and administrative costs include administrative, sales and marketing, occupancy, depreciation and amortization, and other costs.

In 2010, we reversed an accrual related to the provision for regulatory penalties, which is related to one of three privacy claims associated with the alleged inappropriate acquisition of personal bank account information by our Spanish subsidiary, as a result of a favorable ruling by the Spanish Supreme Court. The remaining accrued liability is $0.8 million as of December 31, 2010.

The net gain on insurance settlement in 2010 includes the insurance proceeds received for storm damage to one of our customer contact management centers in the Philippines.

The impairment of goodwill and intangibles in 2010 is primarily related to customer relationships in the ICT-acquired United Kingdom operations. The impairment of goodwill and intangibles in 2009 is related to the March 2005 acquisition of Kelly, Luthmer & Associates Limited (“KLA”), our Employee Assistance and Occupational Health operations in Calgary, Alberta Canada.

The impairment of long-lived assets in the Americas segment in 2010, including the Philippines and the United States, is primarily related to leasehold improvements. The impairment of long-lived assets in the EMEA segment, including the United Kingdom and Ireland, is primarily related to leasehold improvements and equipment.

Interest income primarily relates to interest earned on cash and cash equivalents and foreign tax refunds. Interest expense primarily includes commitment fees charged on the unused portion of our revolving credit facility and interest on the outstanding $75 million Bermuda Credit Agreement beginning December 11, 2009 and the $75 million Term Loan beginning February 2, 2010 as more fully described in this Item 7, under “Liquidity and Capital Resources.”

Impairment (loss) on investment in SHPS represents the estimated fair value adjustment and subsequent liquidation of our noncontrolling interest in SHPS by converting our SHPS common stock into cash for $0.000001 per share.

Foreign currency transaction gains and losses generally result from exchange rate fluctuations on intercompany transactions and the revaluation of cash and other assets and liabilities that are settled in a currency other than functional currency.

Our effective tax rate for the periods presented includes the effects of our change of intent during the quarter ended December 31, 2009 regarding the permanent reinvestment of foreign subsidiaries’ accumulated and undistributed earnings (see Note 21, Income Taxes, of “Notes to Consolidated Financial Statements”), state income taxes, net of federal tax benefit, tax holidays, valuation allowance changes, foreign rate differentials, foreign withholding and other taxes, and other permanent differences.

Acquisition of ICT

On February 2, 2010, we completed the acquisition of ICT Group Inc. (“ICT”), a Pennsylvania corporation and a leading global provider of outsourced customer management and BPO solutions. We refer to such acquisition herein as the “ICT acquisition.”

As a result of the ICT acquisition on February 2, 2010,

	•		each outstanding share of ICT’s common stock, par value $0.01 per share, was converted into the right to receive $7.69 in cash, without interest, and 0.3423 of a share of SYKES common stock, par value $0.01 per share;
	•		each outstanding ICT stock option, whether or not then vested and exercisable, became fully vested and exercisable immediately prior to, and then was canceled at, the effective time of the acquisition, and the holder of such option became entitled to receive an amount in cash, without interest and less any applicable taxes to be withheld, equal to (i) the excess, if any, of (1) $15.38 over (2) the exercise price per share of ICT common stock subject to such ICT stock option, multiplied by (ii) the total number of shares of ICT common stock underlying such ICT stock option, with the aggregate amount of such payment rounded up to the nearest cent. If the exercise price was equal to or greater than $15.38, then the stock option was canceled without any payment to the stock option holder; and
	•		each outstanding ICT restricted stock unit (“RSU”) became fully vested and then was canceled and the holder of such vested awards became entitled to receive $15.38 in cash, without interest and less any applicable taxes to be withheld, in respect of each share of ICT common stock into which the RSU would otherwise have been convertible.

The total aggregate purchase price of the transaction of $277.8 million was comprised of $141.1 million in cash and 5.6 million shares of SYKES common stock valued at $136.7 million. The transaction was funded through borrowings consisting of a $75 million short-term loan from KeyBank National Association (“KeyBank”) in December, 2009, due March 31, 2010, and a $75 million term loan from a syndicate of banks due in varying installments through February 1, 2013 (the “Term Loan”). The entire $75 million Term Loan was repaid during the quarter ended September 30, 2010 and is no longer available for borrowings. See “Liquidity & Capital Resources” later in this Item 7 and Note 19, Borrowings, of “Notes to Consolidated Financial Statements” for further information.

The results of operations of ICT have been reflected in our Consolidated Statement of Operations for the period from February 2, 2010 to December 31, 2010.

Discontinued Operations

In December 2010, we committed to a plan and completed the sale of our Argentine operations, pursuant to stock purchase agreements, dated December 16, 2010 and December 29, 2010. We have reflected the operating results related to the Argentine operations as discontinued operations in the Consolidated Statements of Operations for all periods presented. This business was historically reported as part of the Americas segment. See Note 3, Discontinued Operations, of “Notes to Consolidated Financial Statements” for additional information on the sale of the Argentine operations.

See “Results of Operations – Discontinued Operations” later in this Item 7 for more information. Unless otherwise noted, discussions below pertain only to our continuing operations.

Results of Operations

The following table sets forth, for the periods indicated, the percentage of revenues represented by certain items reflected in our Consolidated Statements of Operations:

		Years Ended December 31,
		2010				2009				2008
Percentage of Revenue:
Revenues			100.0	%			100.0	%			100.0	%
Direct salaries and related costs			64.8				63.5				63.7
General and administrative			32.3				27.3				27.7
(Recovery) of regulatory penalties			(0.0	)			-				-
Net (gain) on insurance settlement			(0.2	)			-				-
Impairment of goodwill and intangibles			0.0				0.2				-
Impairment of long-lived assets			0.3				-				-
Income from continuing operations			2.8				9.0				8.6
Interest income			0.1				0.3				0.7
Interest (expense)			(0.5	)			(0.1	)			(0.0	)
Impairment (loss) on investment in SHPS			—				(0.3	)			-
Other income (expense)			(0.5	)			(0.0	)			1.4
Income from continuing operations before income taxes			1.9				8.9				10.7
Income taxes			0.2				3.2				2.7
Income from continuing operations, net of taxes			1.7				5.7				8.0
(Loss) from discontinued operations, net of taxes			(2.6	)			(0.4	)			(0.3	)
Net income (loss)			(0.9	)%			5.3	%			7.7	%

The following table sets forth, for the periods indicated, certain data derived from our Consolidated Statements of Operations (in thousands):

		Years Ended December 31,
		2010				2009				2008
Revenues		$	1,158,718			$	813,574			$	782,295
Direct salaries and related costs			751,490				516,456				497,913
General and administrative			373,772				222,192				216,871
(Recovery) of regulatory penalties			(418	)			-				-
Net (gain) on insurance settlement			(1,991	)			-				-
Impairment of goodwill and intangibles			362				1,908				-
Impairment of long-lived assets			3,280				-				-
Income from continuing operations			32,223				73,018				67,511
Interest income			1,205				2,295				5,441
Interest (expense)			(5,627	)			(707	)			(178	)
Impairment (loss) on investment in SHPS			—				(2,089	)			-
Other income (expense)			(5,906	)			(257	)			11,298
Income from continuing operations before income taxes			21,895				72,260				84,072
Income taxes			2,197				26,118				21,421
Income from continuing operations, net of taxes			19,698				46,142				62,651
(Loss) from discontinued operations, net of taxes			(29,971	)			(2,931	)			(2,090	)
Net income (loss)		$	(10,273	)		$	43,211			$	60,561

The following table summarizes our revenues for the periods indicated, by reporting segment (in thousands):

		Years Ended December 31,
		2010								2009								2008
Americas		$	934,329				80.6	%		$	565,023				69.4	%		$	514,866				65.8	%
EMEA			224,389				19.4	%			248,551				30.6	%			267,429				34.2	%
Consolidated		$	1,158,718				100.0	%		$	813,574				100.0	%		$	782,295				100.0	%

The following table summarizes the amounts and percentage of revenues for direct salaries and related costs, general and administrative costs, impairment of goodwill and intangibles and impairment of long-lived assets for the periods indicated, by reporting segment (in thousands):

		Years Ended December 31,
		2010								2009								2008
Direct salaries and related costs:
Americas		$	580,740				62.2	%		$	341,681				60.5	%		$	316,068				61.4	%
EMEA			170,750				76.1	%			174,775				70.3	%			181,845				68.0	%
Consolidated		$	751,490				64.9	%		$	516,456				63.5	%		$	497,913				63.6	%
General and administrative:
Americas		$	244,291				26.1	%		$	120,045				21.2	%		$	111,612				21.7	%
EMEA			64,843				28.9	%			58,646				23.6	%			64,406				24.1	%
Corporate			64,638				-				43,501				-				40,853				-
Consolidated		$	373,772				32.3	%		$	222,192				27.3	%		$	216,871				27.7	%
(Recovery) of regulatory penalties:
Americas		$	-				0.0	%		$	-				0.0	%		$	-				0.0	%
EMEA			(418	)			(0.2	)%			-				0.0	%			-				0.0	%
Consolidated		$	(418	)			0.0	%		$	-				0.0	%		$	-				0.0	%
Net (gain) on insurance settlement:
Americas		$	(1,991	)			(0.2	)%		$	-				0.0	%		$	-				0.0	%
EMEA			-				0.0	%			-				0.0	%			-				0.0	%
Consolidated		$	(1,991	)			(0.2	)%		$	-				0.0	%		$	-				0.0	%
Impairment of goodwill and intangibles:
Americas		$	-				0.0	%		$	1,908				0.3	%		$	-				0.0	%
EMEA			362				0.2	%			-				0.0	%			-				0.0	%
Consolidated		$	362				0.0	%		$	1,908				0.2	%		$	-				0.0	%
Impairment of long-lived assets:
Americas		$	3,121				0.3	%		$	-				0.0	%		$	-				0.0	%
EMEA			159				0.1	%			-				0.0	%			-				0.0	%
Consolidated		$	3,280				0.3	%		$	-				0.0	%		$	-				0.0	%

2010 Compared to 2009

Revenues

During 2010, we recognized consolidated revenues of $1,158.7 million, an increase of $345.1 million or 42.4%, from $813.6 million of consolidated revenues for 2009. Excluding the ICT revenues of $362.7 million, revenues decreased $17.6 million for 2010 compared to 2009.

On a geographic segment basis, revenues from the Americas region, including the United States, Canada, Latin

America, India and the Asia Pacific Rim, represented 80.6%, or $934.3 million, for 2010 compared to 69.4%, or $565.0 million, for 2009. Revenues from the EMEA region, including Europe, the Middle East and Africa represented 19.4%, or $224.4 million, for 2010 compared to 30.6%, or $248.6 million, for 2009.

The increase in the Americas’ revenues was $369.3 million, or 65.4%, for 2010, compared to 2009. Excluding the ICT revenues of $362.7 million, the Americas’ revenues for 2010, compared to 2009 increased $6.6 million. The $6.6 million increase consists of a positive foreign currency translation impact of $24.9 million and a favorable foreign currency hedging fluctuation of $14.4 million, partially offset by a $32.7 million decrease in revenues principally due to expiration of certain client programs and lower than forecasted demand within certain clients. Revenues from our offshore operations represented 47.7%, or 54.6% excluding ICT revenues, of Americas’ revenues, compared to 57.5% for 2009. While operating margins generated offshore are generally comparable to those in the United States, our ability to maintain these offshore operating margins longer term is difficult to predict due to potential increased competition for the available workforce, the trend of higher occupancy costs and costs of functional currency fluctuations in offshore markets. We weight these factors in our focus to re-price or replace certain sub-profitable target client programs.

The decrease in EMEA revenues of $24.2 million, or 9.7%, for 2010, compared to 2009, reflects a decrease of $20.7 million due largely to client program expirations, near-shore migration to lower cost geographies in Egypt, Romania and Germany and sustained weakness within the technology and communication verticals and a $4.7 million negative foreign currency translation impact, partially offset by a $1.2 million contribution in revenues from ICT. Excluding the $4.7 million negative foreign currency translation impact, EMEA’s revenues decreased 7.8% for 2010 compared to 2009.

Direct Salaries and Related Costs

Direct salaries and related costs increased $235.0 million, or 45.5%, to $751.5 million for 2010 from $516.5 million in 2009. This increase includes ICT direct salaries and related costs of $230.1 million for 2010.

On a reporting segment basis, direct salaries and related costs from the Americas segment increased $239.0 million, or 70.0%, to $580.7 million for 2010 from $341.7 million in 2009. Direct salaries and related costs from the EMEA segment decreased $4.0 million, or 2.3%, to $170.8 million for 2010 from $174.8 million in 2009. While changes in foreign currency exchange rates positively impacted revenues in the Americas, they negatively impacted direct salaries and related costs in 2010 compared to 2009 by $15.4 million. Conversely, while changes in foreign currency exchange rates negatively impacted revenues in EMEA, they positively impacted direct salaries and related costs in 2010 compared to 2009 by $4.3 million.

In the Americas segment, as a percentage of revenues, direct salaries and related costs increased to 62.2% for 2010 from 60.5% in 2009. This increase of 1.7%, as a percentage of revenues, was primarily attributable to higher compensation costs of 2.8% (primarily related to lower than forecasted demand within certain clients without a commensurate reduction in labor costs and wage increases in certain geographies), higher communication costs of 0.6% and higher billable supply costs of 0.3%, partially offset by lower auto tow claim costs of 1.4%, lower travel costs of 0.2%, lower bonus award costs of 0.1% and lower other costs of 0.3%.

In the EMEA segment, as a percentage of revenues, direct salaries and related costs increased to 76.1% for 2010 from 70.3% in 2009. This increase of 5.8%, as a percentage of revenues, was primarily attributable to higher compensation costs of 3.4% (primarily related to near-shore migration to new facilities in Egypt, Romania and Germany and the corresponding termination and duplicative costs), higher severance costs of 1.6%, higher travel costs of 0.2%, higher billable supply costs of 0.2%, higher recruiting costs of 0.2% and higher other costs of 0.2%.

General and Administrative

General and administrative expenses increased $151.6 million, or 68.2%, to $373.8 million for 2010 from $222.2 million in 2009. This increase includes ICT general and administrative costs of $139.6 million for 2010.

On a reporting segment basis, general and administrative expenses from the Americas segment increased $124.3 million, or 103.6%, to $244.3 million for 2010 from $120.0 million in 2009. General and administrative expenses from the EMEA segment increased $6.2 million, or 10.6%, to $64.8 million for 2010 from $58.6 million in 2009. While changes in foreign currency exchange rates positively impacted revenues in the Americas, they negatively impacted general and administrative expenses in 2010 compared to 2009 by $4.5 million. Conversely, while changes

in foreign currency exchange rates negatively impacted revenues in EMEA, they positively impacted general and administrative expenses in 2010 compared to 2009 by $1.3 million. Corporate general and administrative expenses increased $21.1 million, or 48.6%, to $64.7 million for 2010 from $43.6 million in 2009. This increase of $21.1 million was primarily attributable to ICT acquisition-related costs (comprised of $14.9 million in severance costs and other costs and $6.0 million in transaction and integration costs), higher compensation costs of $0.9 million, higher travel costs of $0.4 million, higher dues and subscriptions of $0.3 million and higher training costs of $0.3 million, partially offset by lower legal and professional fees of $0.9 million, lower business development costs of $0.4 million and lower other costs of $0.4 million.

In the Americas segment, as a percentage of revenues, general and administrative expenses increased to 26.2% for 2010 from 21.2% in 2009. This increase of 5.0%, as a percentage of revenues, was primarily attributable to higher facility-related costs of 1.4%, higher depreciation and amortization costs of 1.9%, higher equipment and maintenance costs of 0.7%, higher ICT acquisition-related costs of 1.1% (primarily severance and lease termination costs) and higher compensation costs of 0.3%, partially offset by lower bad debt expense of 0.2% and lower other costs of 0.2%.

In the EMEA segment, as a percentage of revenues, general and administrative expenses increased to 28.9% for 2010 from 23.6% in 2009. This increase of 5.3%, as a percentage of revenues, was primarily attributable to higher facility-related costs of 2.5%, higher compensation costs of 1.0% (primarily related to near-shore migration to new facilities in Egypt, Romania and Germany and the corresponding termination and duplicative costs), higher travel costs of 0.4%, higher depreciation and amortization costs of 0.3%, higher legal and professional fees of 0.5%, higher equipment and maintenance costs of 0.2%, higher communications costs of 0.2% and higher other costs of 0.2%.

(Recovery) of Regulatory Penalties

During 2010, we reversed an accrual of $0.4 million related to the provision for regulatory penalties, which is related to one of three privacy claims associated with the alleged inappropriate acquisition of personal bank account information by our Spanish subsidiary, as a result of a favorable ruling by the Spanish Supreme Court (none in 2009). The provision was initially recorded in 2007.

Net (Gain) on Insurance Settlement

In September 2009, the building and contents of one of our customer contact management centers located in Marikina City, the Philippines (acquired as part of the ICT acquisition) was severely damaged by flooding from Typhoon Ondoy. Upon settlement with the insurer in November 2010, we recognized a net gain of $2.0 million (none in 2009). The damaged property and equipment had been written down by ICT prior to the ICT acquisition in February 2010.

Impairment of Goodwill and Intangibles

We make certain estimates and assumptions, including, among other things, an assessment of market conditions and projections of cash flows, investment rates and cost of capital and growth rates when estimating the value of our intangibles. Based on actual and forecasted operating results and deterioration of the related customer base in our ICT-acquired United Kingdom operations, the EMEA segment recorded an impairment charge of $0.4 million on goodwill and intangibles (primarily customer relationships) during 2010. The Americas segment recorded an impairment charge of $1.9 million on goodwill and intangibles during 2009 related to the March 2005 acquisition of KLA.

Impairment of Long-Lived Assets

During 2010, we recorded a $3.1 million impairment charge for long-lived assets, primarily leasehold improvements, in the Americas segment, including the Philippines and the United States (none in 2009). Additionally, we recorded a $0.2 million impairment charge for long-lived assets, primarily leasehold improvements and equipment in the EMEA segment, including the United Kingdom and Ireland (none in 2009). The impairment charge represented the amount by which the carrying value of the assets exceeded the estimated fair value of those assets which cannot be redeployed to other locations.

Interest Income

Interest income was $1.2 million for 2010, compared to $2.3 million in 2009, reflecting lower average rates earned on lower average balances of interest bearing investments in cash and cash equivalents.

Interest (Expense)

Interest expense was $5.6 million for 2010 compared to $0.7 million in 2009, an increase of $4.9 million reflecting interest and fees on higher average levels of borrowings related to the acquisition of ICT. We expect interest expense to decrease in 2011 as a result of the payoff of the $75 million Bermuda Credit Agreement and the $75 million Term Loan, drawn down in 2010 in connection with the acquisition of ICT.

Impairment (Loss) on Investment in SHPS

In the Americas segment, we recorded an impairment loss of $2.1 million on our entire investment in SHPS during 2009 (none in 2010).

Other Income (Expense)

Other expense, net, was $5.9 million for 2010 compared to $0.3 million in 2009. The net increase in other expenses, net, of $5.6 million was primarily attributable to an increase of $2.7 million in realized and unrealized foreign currency transaction losses, net of gains, an increase of $2.6 million in forward currency contract losses (which were not designated as hedging instruments) and an increase of $0.3 million in other miscellaneous expenses, net. Other income (expense) excludes the cumulative translation effects and unrealized gains (losses) on financial derivatives that are included in “Accumulated other comprehensive income” in shareholders’ equity in the accompanying Consolidated Balance Sheets.

Income Taxes

The provision for income taxes of $2.2 million for 2010 was based upon pre-tax income of $21.9 million, compared to the provision for income taxes of $26.1 million for 2009 based upon pre-tax income of $72.3 million. The effective tax rate was 10.0% for 2010 compared to an effective tax rate of 36.1% for 2009.

The decrease in the effective tax rate of 26.1% resulted primarily from the proportionately higher income under tax holiday jurisdictions, the foreign tax rate differential, a favorable change in uncertain tax positions due to a favorable settlement of a tax audit, expiring statutes of limitation and tax benefits related to the ICT legal entity reorganization, and the absence of an unfavorable impact related to the $85.0 million change of intent to repatriate foreign earnings in 2009, partially offset by the lack of a release of valuation allowances and a higher proportion of withholding taxes in 2010.

On December 17, 2010 the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (the “Tax Relief Act”) was enacted. Included in the Tax Relief Act is the extension until December 31, 2011 of Internal Revenue Code Section 954(c)(6). As a result of this extension, we changed our intent to distribute current earnings from various foreign operations to their foreign parents. These tax provisions permit continued tax deferral on such distributions that would otherwise be taxable immediately in the United States. While the distributions are not taxable in the United States, related withholding taxes of $1.7 million are included in the provision for income taxes in the Consolidated Statement of Operations for 2010.

Prior to the passage of the Tax Relief Act, we determined that we intended to distribute all of the current year and future years’ earnings of a non-U.S. subsidiary to its foreign parent. Withholding taxes of $0.9 million related to this distribution are included in the provision for income taxes in the Consolidated Statement of Operations for 2010.

(Loss) from Discontinued Operations

During December 2010, we committed to a plan and sold our Argentine operations. We accounted for this transaction in accordance with ASC 205-20 (“ASC 205-20”) “Discontinued Operations”, and, accordingly, we have reclassified the results of operations and any losses resulting from the sale for all periods presented to reflect them as such. The loss from discontinued operations, net of tax, totaled $6.5 million and $2.9 million for 2010 and 2009, respectively. This increase of $3.6 million includes $3.3 million from the ICT Argentine operations acquired in February 2010. Excluding the loss from discontinued ICT Argentine operations of $3.3 million, the loss from discontinued operations increased $0.3 million for 2010 compared to 2009, primarily due to the impairment of long-lived assets. The loss on sale of discontinued operations, net of tax, was $23.5 million for 2010.

Net Income (Loss)

     As a result of the foregoing, we reported income from continuing operations for 2010 of $32.2 million, a decrease of $40.8 million from 2009. This decrease was principally attributable to a $235.0 million increase in direct salaries and related costs, a $151.6 million increase in general and administrative costs and a $3.3 million impairment of long-lived assets, partially offset by a $345.1 million increase in revenues, a $2.0 million net gain on insurance settlement, a decrease in impairment of goodwill and intangibles of $1.6 million and a $0.4 million reversal of the provision for regulatory penalties. In addition to the $40.8 million decrease in income from continuing operations, we experienced a $5.6 million increase in other expense, net, an increase in interest expense of $4.9 million, a $1.1 million decrease in interest income, an increase of $3.6 million of loss from discontinued operations and a $23.5 million loss on sale of discontinued operations, partially offset by a decrease of $2.1 million due to the impairment loss on investment in SHPS in 2009 and a $23.9 million lower tax provision, resulting in a net loss of $10.3 million for 2010, a decrease of $53.5 million compared to 2009.

2009 Compared to 2008

Revenues

During 2009, we recognized consolidated revenues of $813.6 million, an increase of $31.3 million or 4.0%, from $782.3 million of consolidated revenues for 2008. Revenues increased in 2009, despite the rapid and sharp deterioration in the economy, due to increased demand from our new and existing client relationships.

On a geographic segment basis, revenues from the Americas region, including the United States, Canada, Latin America, India and the Asia Pacific Rim, represented 69.4%, or $565.0 million, for 2009 compared to 65.8%, or $514.9 million, for 2008. Revenues from the EMEA region, including Europe, the Middle East and Africa represented 30.6%, or $248.6 million, for 2009 compared to 34.2%, or $267.4 million, for 2008.

The increase in the Americas’ revenues of $50.1 million, or 9.7%, for 2009 compared to 2008, reflects a broad-based growth in client demand, including new and existing client relationships, partially offset by certain program expirations and a negative foreign currency impact of $13.8 million. Excluding this $13.8 million foreign currency impact, Americas’ revenue increased $63.9 million, or 12.4% in 2009 compared to 2008. The $63.9 million increase includes new and existing client relationships, primarily due to a combination of new programs with existing clients, expansion of existing programs and new client relationships. Revenues from our offshore operations represented 57.5% of Americas’ revenues, compared to 59.0% for 2008. Americas’ revenues for 2009 and 2008 also included a $9.3 million and a $2.4 million net loss on foreign currency hedges, respectively. Excluding the effect of this $6.9 million foreign currency hedging fluctuation, the Americas’ revenues increased $57.0 million, or 11.1%, for 2009 compared to 2008.

The decrease in EMEA’s revenues of $18.8 million, or 7.1%, for 2009 compared to 2008, reflects a $22.4 million negative foreign currency impact partially offset by an increase of $3.6 million in client demand. This $3.6 million increase in client demand includes a $3.0 million increase in existing client programs as well as a $0.6 million increase in new client relationships. Excluding the $22.4 million foreign currency impact, EMEA’s revenues increased 1.3% for 2009 compared to 2008.

Direct Salaries and Related Costs

Direct salaries and related costs increased $18.6 million, or 3.7%, to $516.5 million for 2009 from $497.9 million in 2008.

On a reporting segment basis, direct salaries and related costs from the Americas segment increased $25.6 million, or 8.1%, to $341.7 million 2009 from $316.1 million for 2008. Direct salaries and related costs from the EMEA segment decreased $7.0 million, or 3.9%, to $174.8 million for 2009 from $181.8 million in 2008. Changes in foreign currency exchange rates positively impacted revenues in the Americas, they also positively impacted direct salaries and related costs in 2009 compared to 2008 by $17.3 million. While changes in foreign currency exchange rates negatively impacted revenues in EMEA, they positively impacted direct salaries and related costs in 2009 compared to 2008 by $15.1 million.

In the Americas segment, as a percentage of revenues, direct salaries and related costs decreased to 60.5% for 2009 from 61.4% in 2008. This decrease of 0.9%, as a percentage of revenues, was primarily attributable to lower auto tow claim costs of 0.7%, lower other costs of 0.4%, lower travel costs of 0.1% and lower recruiting costs of 0.1%, partially offset by higher bonus award costs of 0.2%, higher compensation costs of 0.1%, and higher communication costs of 0.1%.

In the EMEA segment, as a percentage of revenues, direct salaries and related costs increased to 70.3% for 2009 from 68.0% in 2008. This increase of 2.3%, as a percentage of revenues, was primarily attributable to higher compensation costs of 1.8%, higher fulfillment material costs of 0.3%, higher billable supply costs of 0.2%, higher communication costs of 0.1%, higher seminar costs of 0.1% and higher other costs of 0.3%, partially offset by lower recruiting costs of 0.5%.

General and Administrative

General and administrative expenses increased $5.3 million, or 2.4%, to $222.2 million for 2009 from $216.9 million in 2008.

On a reporting segment basis, general and administrative expenses from the Americas segment increased $8.4 million, or 7.5%, to $120.0 million for 2009 from $111.6 million in 2008. General and administrative expenses from the EMEA segment decreased $5.8 million, or 8.9%, to $58.6 million for 2009 from $64.4 million in 2008. While changes in foreign currency exchange rates negatively impacted revenues in the Americas and EMEA, they positively impacted general and administrative expenses in 2009 compared to the same period in 2008 by approximately $4.2 million and $6.0 million, respectively. Corporate general and administrative expenses increased $2.7 million, or 6.5%, to $43.6 million for 2009 from $40.9 million in 2008. This increase of $2.7 million was primarily attributable to higher compensation costs of $3.6 million, higher software maintenance costs of $0.5 million, higher legal and professional fees of $2.6 million, higher business development costs of $0.4 million and higher depreciation and amortization costs of $0.2 million, partially offset by lower travel costs of $1.3 million, lower facility-related costs of $0.2 million, lower consulting costs of $0.6 million, lower training costs of $0.7 million, lower insurance costs of $0.4 million, lower bad debt expense of $0.8 million and lower other costs of $0.6 million.

In the Americas segment, as a percentage of revenues, general and administrative expenses decreased to 21.2% for 2009 from 21.7% in 2008. This decrease of 0.5%, as a percentage of revenues, was primarily attributable to lower software maintenance costs of 0.2%, recruiting costs of 0.2% and lower depreciation and amortization costs of 0.2%, partially offset by higher other costs of 0.1%.

In the EMEA segment, as a percentage of revenues, general and administrative expenses decreased to 23.6% for 2009 from 24.1% in 2008. This decrease of 0.5%, as a percentage of revenues, was primarily attributable to lower travel costs of 0.3%, lower recruiting costs of 0.2%, lower facility-related costs of 0.1%, lower supply costs of 0.1%, lower communications costs of 0.1%, lower training costs of 0.1% and lower other costs of 0.3%, partially offset by higher compensation costs of 0.3%, higher bad debt expense of 0.2% and higher depreciation and amortization costs of 0.2%.

Impairment of Goodwill and Intangibles

We make certain estimates and assumptions, including, among other things, an assessment of market conditions and projections of cash flows, investment rates and cost of capital and growth rates when estimating the value of our intangibles. Based on actual and forecasted operating results, deterioration of the related customer base and loss of key employees, the Americas segment recorded an impairment charge of $1.9 million on goodwill and intangibles during 2009 related to the March 2005 acquisition of KLA (none in 2008).

Interest Income

Interest income was $2.3 million in 2009, compared to $5.4 million in 2008. Interest income decreased $3.1 million reflecting lower average rates earned on higher average balances of interest bearing investments in cash and cash equivalents.

Interest (Expense)

Interest expense was $0.7 million for 2009 compared to $0.2 million for 2008, an increase of $0.5 million reflecting higher average levels of outstanding short-term debt, primarily related to the $75 million Bermuda Credit Agreement, higher average rates, amortization of deferred loan fees and fees paid on our unused revolving credit facility.

Impairment (Loss) on Investment in SHPS

During 2009, we received notice from SHPS that the shareholders of SHPS had approved a merger agreement between SHPS and SHPS Acquisition, Inc., pursuant to which the common stock of SHPS, including the common stock owned by us, would be converted into the right to receive $0.000001 per share in cash. SHPS informed us that it believed the estimated fair value of the SHPS common stock to be equal to such per share amount. As a result of this transaction and careful evaluation of our legal options, we believed it was more likely than not that we will not be able to recover the $2.1 million carrying value of the investment in SHPS. Therefore, in the Americas segment, we recorded a non-cash impairment loss of $2.1 million during 2009. Subsequent to the recording of the impairment loss, we liquidated our noncontrolling interest in SHPS by converting our SHPS common stock into cash for $0.000001 per share during 2009.

Other Income (Expense)

Other expense, net, was $0.3 million in 2009 compared to other income, net, of $11.3 million in 2008. This $11.6 million net increase in other expense was primarily attributable to an increase of $11.6 million in unrealized foreign currency transaction losses, net of gains arising from the revaluation of nonfunctional currency assets and liabilities and an increase of $1.7 million in forward currency contract losses (which were not designated as hedging instruments), partially offset by a $1.7 million increase in other income. Other income excludes the effects of cumulative translation effects and unrealized gains (losses) on financial derivatives that are included in “Accumulated other comprehensive income (loss)” in shareholders’ equity in the accompanying Consolidated Balance Sheets.

Income Taxes

The provision for income taxes of $26.1 million for 2009 was based upon pre-tax income of $72.3 million, compared to the provision for income taxes of $21.4 million for 2008 based upon pre-tax income of $84.1 million. The effective tax rate was 36.1% for 2009 compared to an effective tax rate of 25.5% for 2008.

The increase in the effective tax rate of 10.6% resulted primarily from our change of intent during the quarter ended December 31, 2009 regarding the permanent reinvestment of $85 million of our foreign subsidiaries’ accumulated and undistributed earnings, which came about due to our borrowing of a $75 million Term Loan on February 2, 2010 to close the ICT acquisition and a $10 million increase in estimated costs relating to the ICT acquisition. The proposed acquisition of ICT and the intent to fund the transaction through committed credit facilities was announced on October 6, 2009. Under the provisions of ASC 740-30, we determined that, based upon historical results, we could not retire the $75 million Term Loan and pay the additional $10 million in estimated costs without depleting excess U.S. cash flows needed for future operations. Accordingly, a deferred tax expense of $14.7 million, net of a release of a valuation allowance of $1.6 million on foreign tax credits related to this change in intent, was required to be recorded for financial reporting purposes during the quarter ended December 31, 2009 under ASC 740-30. The Finance Committee of our Board of Directors approved the repatriation of $85.0 million of foreign subsidiaries’ accumulated and undistributed earnings on February 8, 2010. All other undistributed earnings are still permanently reinvested in accordance with ASC 740-30. Other items that increased the effective tax rate were an additional deferred tax liability of $2.9 million, favorable foreign income tax rate differentials of $1.6 million and the effects of the change in our permanent differences in the amount of $1.5 million.

This increase in the effective rate was partially offset by a $6.6 million change in the recognition of deferred tax assets primarily due to fluctuations in our valuation allowances, a reduction of $3.5 million in foreign withholding taxes, and a $2.9 million increase in the benefits from tax holiday jurisdictions. The reduction of $3.5 million in foreign withholding taxes was primarily a result of a reduction in the amount of dividends distributed by our Philippine company to its foreign parent in the Netherlands in 2009 when compared to 2008.

Generally, earnings associated with our investments in our subsidiaries are considered to be permanently invested and no provision for income taxes on those earnings or translation adjustments has been provided. The U.S. Department of the Treasury released the “General Explanations of the Administration’s Fiscal Year 2010 Revenue Proposals” in May 2009. These proposals represent a significant shift in international tax policy, which may materially impact U.S. taxation of international earnings, including our position on permanent reinvestment of foreign earnings. In response to this release, we changed our intent for 2009 with respect to the distribution of current earnings for one lower tier subsidiary and incurred withholding tax expense of $2.5 million in 2009 with respect to this subsidiary’s current earnings.

(Loss) from Discontinued Operations

During December 2010, we committed to a plan and sold our Argentine operations. We accounted for this transaction in accordance with ASC 205-20, and, accordingly, have reclassified the results of operations to reflect them as discontinued operations for all periods presented. The loss from discontinued operations, net of tax, totaled $2.9 million and $2.1 million for 2009 and 2008, respectively. The $0.8 million increase in loss from discontinued operations, driven by a decrease in client demand, resulted from a $4.5 million decrease in revenues, partially offset by $1.7 million lower direct salaries and related costs, $1.4 million lower general and administrative costs and $0.6 million lower other expenses (including asset disposals and interest expense).

Net Income

As a result of the foregoing, we reported income from continuing operations for 2009 of $73.0 million, an increase of $5.5 million from 2008. This increase was principally attributable to a $31.3 million increase in revenues, partially offset by an $18.6 million increase in direct salaries and related costs, a $5.3 million increase in general and administrative costs and an impairment charge of $1.9 million. The $5.5 million increase in income from continuing operations was offset by a $11.6 million decrease in other income, net, a $3.1 million decrease in interest income, a $2.1 million impairment loss on investment in SHPS, an increase in interest expense of $0.5 million, a $4.7 million higher tax provision and an increase of $0.8 million in loss from discontinued operations, resulting in net income of $43.2 million for 2009, a decrease of $17.3 million compared to 2008.

Quarterly Results

The following information presents our unaudited quarterly operating results from continuing operations for 2010 and 2009. The data has been prepared on a basis consistent with the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K, and includes all adjustments, consisting of normal recurring accruals, that we consider necessary for a fair presentation thereof.

(in thousands, except per share data)		12/31/2010				9/30/2010				6/30/2010				3/31/2010				12/31/2009				9/30/2009				6/30/2009				3/31/2009
Revenues (1)		$	309,146			$	294,455			$	288,535			$	266,582			$	213,338			$	205,311			$	200,486			$	194,439
Operating expenses:
Direct salaries and related costs (1)			200,334				190,813				188,693				171,650				136,832				128,323				127,041				124,260
General and administrative (1,2,3)			96,894				86,800				90,055				100,023				60,448				55,469				53,659				52,616
(Recovery) of regulatory penalties			(418	)			-				-				-				-				-				-				-
Net (gain) on insurance settlement			(1,991	)			-				-				-				-				-				-				-
Impairment of goodwill and intangibles			-				362				-				-				-				324				1,584				-
Impairment of long-lived assets			177				3,103				-				-				-				-				-				-
Total operating expenses			294,996				281,078				278,748				271,673				197,280				184,116				182,284				176,876
Income (loss) from continuing operations			14,150				13,377				9,787				(5,091	)			16,058				21,195				18,202				17,563
Other income (expense):
Interest income			393				312				268				232				356				493				600				846
Interest (expense) (4,5)			(388	)			(1,373	)			(1,520	)			(2,346	)			(410	)			(79	)			(170	)			(48	)
Impairment (loss) on investment in SHPS			-				-				-				-				-				-				(2,089	)			-
Other income (expense)			(360	)			(527	)			(3,590	)			(1,429	)			(1,144	)			(56	)			84				859
Total other income (expense)			(355	)			(1,588	)			(4,842	)			(3,543	)			(1,198	)			358				(1,575	)			1,657
Income (loss) from continuing operations before income taxes			13,795				11,789				4,945				(8,634	)			14,860				21,553				16,627				19,220
Income taxes (6)			3,965				(2,267	)			966				(467	)			18,186				2,388				1,257				4,287
Income (loss) from continuing operations, net of taxes			9,830				14,056				3,979				(8,167	)			(3,326	)			19,165				15,370				14,933
(Loss) from discontinued operations, net of taxes			(3,286	)			(410	)			(1,434	)			(1,346	)			(1,363	)			(383	)			(1,022	)			(163	)
(Loss) on sale of discontinued operations, net of taxes			(23,495	)			-				-				-				-				-				-				-
Net income (loss)		$	(16,951	)		$	13,646			$	2,545			$	(9,513	)		$	(4,689	)		$	18,782			$	14,348			$	14,770
Net income (loss) per common share (7) :
Basic:
Continuing operations		$	0.21			$	0.30			$	0.09			$	(0.18	)		$	(0.08	)		$	0.47			$	0.38			$	0.37
Discontinued operations			(0.58	)			(0.01	)			(0.04	)			(0.03	)			(0.03	)			(0.01	)			(0.03	)			(0.01	)
Net income (loss) per common share		$	(0.37	)		$	0.29			$	0.05			$	(0.21	)		$	(0.11	)		$	0.46			$	0.35			$	0.36
Diluted:
Continuing operations		$	0.21			$	0.30			$	0.09			$	(0.18	)		$	(0.08	)		$	0.47			$	0.38			$	0.36
Discontinued operations			(0.58	)			(0.01	)			(0.04	)			(0.03	)			(0.03	)			(0.01	)			(0.03	)			(0.00	)
Net income (loss) per common share		$	(0.37	)		$	0.29			$	0.05			$	(0.21	)		$	(0.11	)		$	0.46			$	0.35			$	0.36
Weighted average shares:
Basic			46,451				46,468				46,601				44,590				40,827				40,743				40,654				40,630
Diluted			46,563				46,559				46,648				44,766				41,151				41,097				40,953				41,034