Debbie Pawlowski – Investor Relations James Boldt – President and Chief Executive Officer Brendan Harrington – Senior Vice President and Chief Financial Officer

Rick D’auteuil – Columbia Management Advisors, LLC William Ditullio – Boenning & Scattergood Inc. Frank Sparacino – First Analysis Securities Corporation Ben Desinberth – Thomas Nogales Financial, LLC Bill Sutherland – Boenning & Scattergood Inc.

Jason Schacht – Heartland Advisors Inc.

Thank you, Linda, and good morning, everyone. We certainly appreciate your time and your interest in CTG.

On the call today we have President and Chief Executive Officer, Jim Boldt, and Brendan Harrington, Senior Vice President and Chief Financial Officer. Jim and Brendan are going to review the results for the second quarter of 2008 and update you on the Company's strategy and outlook.

We will follow with an opportunity for Q&A. If you do not have the news release discussing our financial results, you can access it at the Company's website at www.ctg.com.

Before we begin, I want to mention that statements in the course of this conference call that state the Company's or management's intentions, hopes, beliefs, expectations and predictions for the future are forward-looking statements. It is important to note that the Company's actual results could differ materially from those projected.

Additional information concerning factors that could cause actual results to differ from those in the forward-looking statements is contained in our earnings release, as well as in the Company's SEC filings. You can find them at our website or the SEC's website at www.sec.gov.

So please review our forward-looking statements in conjunction with these precautionary factors.

Thanks, Debbie. Good morning, everyone.

This is Jim Boldt. I want to thank you for joining us this morning for our second quarter earnings conference call.

As you saw in our earnings release, our second quarter revenue and earnings were both well above our guidance. We are pretty excited about the fact that revenues from our health care business increased by 20% over the second quarter of last year.

The growth in our solutions business has been a major contributor to the 200-basis-point improvement in our operating margin in the quarter. The favorable outlook for our solutions business has caused us to raise our guidance once again for the year.

Thanks, Jim. Good morning.

For the second quarter of 2008, CTG's revenue was $94.1 million an increase of $13.9 million or up 17.4% compared with the second quarter of 2007. Operating income increased 126% in the second quarter to $4.0 million, largely as a result of the growth in our more profitable solutions business.

This growth also drove the 200-basis-point increase in our operating margin to 4.2% of revenue, its highest level in several years. Net income was $2.1 million in the quarter, an increase by 105% from $1 million in the second quarter of 2007.

Net income per diluted share was $0.13 for the quarter, a 117% increase over last year. Both the 2008 and 2007 second quarters' results include equity compensation expense of approximately $0.01 per diluted share net of tax.

Solutions revenue in the second quarter of 2008 was 34% of total revenue or $31.9 million. This represents 14% growth in our solutions revenue compared to the second quarter of 2007.

Direct costs as a percentage of revenue were 77% in the second quarter compared with 77.6% in the second quarter of 2007 and 78.4% in the first quarter of 2008. We had $29.3 million in revenue from IBM, our largest staffing customer in the quarter compared with $23.6 million in the second quarter of 2007.

This represents 31.2% and 29.5% of total revenue in the 2008 and 2007 second quarters respectively. Revenue from our European operations was $21.4 million in the second quarter, a 23% increase from the $17.4 million recorded in last year's second quarter.

Excluding foreign exchange fluctuations, European revenue in the quarter would have increased by 7.6%. The tax rate for the 2008 second quarter was approximately 48% compared with 39% last year.

The rate was higher than normal due to the increase of valuation reserves for net operating losses of our foreign subsidiaries. The expected tax rate for the 2008 full year is between 40% and 44% compared with 38% in 2007.

The Company had 3,500 employees at the end of the second quarter of 2008 of which approximately 89% are billable resources. On the balance sheet, our days sales outstanding was 59 days compared with 64 days at the end of the second quarter 2007 and with 60 days at the end of the first quarter 2008.

Our cash flows from operations in the second quarter were approximately $36,000. We had $792,000 of capital expenditures and recorded depreciation expense of $490,000 in the quarter.

During the second quarter of 2008, while adhering to SEC-imposed volume limitations. We repurchased 176,000 shares of CTG common stock.

The repurchases in the quarter were made at an average price of $4.97 per share.

Thanks, Bernard. The primary driver of the significant increase in our profitability in the second quarter was our solutions business.

There is no doubt that we are realizing the benefits from the investments that we made in our solutions business over the last few years, particularly in the health care market. Several new health care projects began in the second quarter 2008 and will continue to ramp up in the third quarter of the year.

There is proposal activity in the pipeline and our health care vertical continues to be strong. We expect to see additional health care business come online as the year progresses.

Health care solutions business has been the main driver of our margin improvement and quite frankly, it allowed us to achieve an operating margin above 4% a lot sooner than we anticipated. Our staffing business increased 19% in the second quarter of 2008 when compared to the second quarter of last year.

The increase was higher than we anticipated and we believe it to be significantly higher than that experienced by the US staffing industry. Growth in our business to the technology service provider market, as well as additional revenue we generated from taking over the staffing responsibility for a new area at an existing customer site during the first quarter of the year were the major contributors to the growth in our staffing business.

As to the third quarter of 2008, we are forecasting revenues in the range of $89 million to $91 million, 10% to 13% higher than last year's third quarter. As you know, we had 64 billable days in the second quarter.

One billable day equates to about $1,450,000 of revenue and we will have 63 billable days in the third quarter 2008. In addition, as the billable staff takes more vacation in the third quarter than in the second, we generally lose about 3% of our revenue quarter to quarter due to the additional vacation time.

Given the revenue forecast, we are forecasting earnings per share in the third quarter of 2008 to be in the range of $0.10 to $0.12 per diluted share, 67% to 100% above the third quarter of 2007. As you know, we have also increased our guidance for the year.

We currently believe that CTG's 2008 revenue will be in the range of $363 million to $367 million, 12% to 13% above 2007. We expect that net income per diluted share in 2008 will be in the range of $0.44 to $0.48, 76% to 92% above last year.

To sum it up, our second quarter performance was significantly better than we expected. We expect our solutions business will continue to advance as additional solutions projects ramp up, primarily in our health care vertical.

As our health care solutions proposal activity remains strong, we continue to expect that our improving mix and more profitable solutions business will drive higher year-over-year earnings in the second half of the year. The bottom line is that despite a weaker economy.

We believe that CTG is on track to have a very good year in 2008. Even more importantly, as we look beyond 2008, we see further opportunity as CTG capitalizes on its excellent traction in the growing health care industry by developing new and innovative solutions to improve patient care and lower cost of the technology.

With that, I would like to open the call for questions if there are any. Operator, would you please begin our question-and-answer period?

We are two for two. A couple of questions.

First of all, excellent quarter and great progress. Love to see the operating margin improvement and progress that we have been hoping for.

We actually had more health care and solutions projects start up in the quarter than we anticipated. And the other thing and I suppose we should have anticipated this, but these are new, many of them are new projects that we have never done before to new customers.

The margins on the new projects are significantly higher than we expect. We have told people and actually, in the quarter, pretty much the solutions business was now starting to hit its target margins but we have told people on average we expected operating income from solutions of about 10%.

The new projects that we are starting up are significantly higher than that because the things that, we are the only person, perhaps, in the market that is offering or they are solutions where there is a tremendous return and therefore the margins are just better.

Well, we are somewhat cyclical, unfortunately. If you were to rank the quarters, second quarter's the best because you do not get many people taking vacation compared to other quarters, and there is only one holiday.

In the third quarter of the year, you have got a couple holidays, lots of people taking vacation. So in some years, we have actually ramped our SG&A expenses down to somewhat adjust for that.

And to some extent, we probably will this year. But because we have so many opportunities, we want to keep the investments, particularly in the solutions business, going.

Yes. Unfortunately, there is going to be a fairly long explanation, so if you have follow-on questions, please ask, because I am sure other people are thinking the same thing.

As you know, we have been on the NHS contract in the UK for three years, now, since basically its inception. Part of our business over there the largest part of our business over there has been with Fujitsu, one, the prime contractor in the Southern region.

At the very end of the second quarter and they both announced at the same time, either the NHS terminated Fujitsu, or Fujitsu were through. Those were the two comments that the two parties made.

And therefore, Fujitsu's no longer the prime vendor for the Southern region, and they have not selected a new vendor yet, and I suspect it's going to take them a little bit of time to do that. In the UK, we had decided that we were going to create a health care practice and we actually looked at it as an investment, long-term investment.

And as a consequence of that, we had more salespeople et cetera, than you would normally have for the revenues that we are getting. Unfortunately, the revenue did not ramp up as quickly as we originally anticipated because the software was not available.

So we actually have run losses in the UK. Under the accounting rules, if you have a loss and you anticipate that at some point you are going to get the money back, a net operating loss carries forward, at some point you will apply that to future earnings.

You are allowed not to recognize the loss currently. You can basically put it on the balance sheet as a deferred tax asset, and when you get the money back, it just kind of goes away.

It never hits your income statement. When you get to the end of each quarter, you have to forecast what your earnings are in each one of the countries that you do business.

And in the past, we always forecast that certainly those NOLs would be retrieved as the NHS project ramped up and as Fujitsu started to do more and more hospitals. Well, we cannot do that at the moment, because, while I am very hopeful that we will supply the next vendor with people and we do have people currently in the London region and we have people directly with the Trust.

It is not as easy for us to forecast, but we are definitely going to make income in the next few years in the UK and therefore be able to use the net operating loss. And the accounting rules take a more conservative approach.

If you are in that position, you write the NOL off at that point in time, which is what we did during the quarter.

We have adjusted it some, because we are kind of in this, we are not sure what is going to happen next mode. The people that were in health care that were from England, we have basically sold either to the London region or to some of the individual hospitals or trusts, as they call them.

Well, just so everybody knows, there are five regions in the NHS. The London region, the prime is BT for the other regions, it is CSC.

And each one of them has a contract, and there is delivery dates on all of them. So my impression is that everything is moving forward as quickly as it can.

The issue really is that the software, while it is improved greatly that the NHS is looking for is not available. They are not willing to sign off that this software meets all of their requirements and we can go ahead with the full-blown implementation.

Okay. Let me give it to you both ways.

I am not sure where you picked it up in my presentation, but in the second quarter we had projects start up in the areas of electronic medical records for the first time. We have done a lot of work in electronic medical records.

In 2005, it was 1% of our revenues. Last year it was, I am sorry, in 2007, it was 5% of our revenues.

But it is all been in hospitals, so we have been installing it just for the hospital to use. Starting in the second quarter, we actually started a project up to work on doing a community-wide electronic medical records system for RHIO.

So it is the first time that we have ever done that and probably the first time anybody is ever done that, actually. We also started up a project in the area of a redesign of a version upgrade and testing for one of the payers.

We started up several implementation and integration projects putting software in the hospitals, which is kind of an ongoing business we have had for many years, did some outsourcing work for a payer, and then we are doing a mainframe migration over to servers for a payer. So those are some of the projects that I talked about started up the second quarter that is going to continue to ramp up, really, during the third quarter.

And going forward, we have a series of offerings. We actually have worked on offerings for three years and this year in 2008, the offering actually became commercial.

The Electronic Medical Records is a really good example of it. Going forward we had some other offerings for the health care market that the methodology tools that helped undo that are just being completed now.

An example of the offering we expect that will become commercial in the second half of the year would be in the area of fraud, waste and abuse, it is a tool set that will help in hospitals identify Medicaid and Medicare fraud waste and abuse.

That is, but let me just explain the history. And I am going to be specific to the health care solutions business, because it is probably the biggest area that we have going forward.

We have a system that is, I think, a fairly good system of handicapping items on our proposal based upon whether we have done business with the customer before, the fact that we have done that offering before and how many times we have won and things like that. And if you look back and look actually at our quarterly guidance, for six years, so 24 quarters, we were within our guidance range for all of those.

And the only reason we were not before that, in the seventh quarter, we had our tax benefit from our tax court case. So that the system works, we think, very well.

And we have been very consistent and have been able to estimate what our revenues are going forward up until the first quarter of this year. And in both the first quarter of this year and the second quarter of this year, we did better than we anticipated.

And the primary reason was that in the health care area, we are proposing new offerings that we may never have done before or no one has ever done before, for instance, the regional electronic medical record plan. And often the customer is a brand new customer, one that we have not dealt with before.

And under our system, they got a very low probability of being successful, it is kind of a factoring system because of the fact that it is a new offering and it has never been done before. Now, on both the first quarter and the second quarter and we believe that the right thing to do at the moment is to forecast in that manner.

Now, the first quarter and the second quarter were above our guidance in both quarters and the reason was that one of those projects actually delivered. But in one of, part of your question was what the cycle is?

Well, we have purchased stock at these levels and higher, actually in the past. So certainly $5.00 or above $5.00 does not bother us.

What we look at is, as an IT services Company, we have to look at our investments. And in terms of capital usually for the last couple of years, at least, our CapEx and our depreciation has been about the same.

So there is no significant investment really required there.

Okay. The two areas that I mentioned, the technology service provider business which grows most in our IBM business, and this new area that we took over for a customer, not in any one of our three primary verticals are the biggest drivers of the revenue growth during the quarter.

And actually, the new area that we took over, we kind of took it over mid first quarter. So you are seeing quarter to quarter, at least, having that business in our revenue for the full quarter versus only half a quarter the quarter before.

I think, as most people know, our IBM business is primarily to one IBM division. It is the STG division, the server division, and that business is more driven by project.

It is the number of projects they start up versus the number of projects that end. And it definitely was strong for us in the last year.

We do have some other ones. We have one that I think has a tremendous potential.

It is a voice recognition system that can be used in a warehouse so you no longer have to input numbers into a laser gun that is kind of reading the bar code, bar code gun or write things down manually. And it is a system that can be used in areas where there is a lot of ambient noise around you.

So it is very good at hearing the person and communicating with the person via computer. I personally think it is an amazing system, because I, when they were developing it.

I was very concerned about the fact that in various areas of the country. You have different accents, which is a problem.

And parts of the country, you have some workers that might speak Spanish that are using the system and that it would be very difficult for the system to pick up. Our guys did a fabulous job, I think, of programming it so that it would take different languages, different dialects.

I actually got hooked up to it for an hour or two, and I could not fool it. Even saying things like "Yeah" instead of "Yes."

It correctly realized it. And then it repeats the answer back to you, so if it had picked me up incorrectly, I would have an opportunity to fix it or say "Si" instead of yes, still picked it up.

So that is one that is outside of the health care area that I think has some potential going forward, and we do have some opportunities in the pipeline for it going forward. But again we have it installed, by the way, at one very large customer, finishing off the installation for all of their warehouses, and I think we will have it operational, certainly by the end of the year in at least 200 of their warehouses.

Yes. The testing is gone very well, and we are actually we have a client in the payer space who is our first targeted client, and they were excited about it.

They have actually been providing us with real data so that we can test it on live data. Testing has gone very well, and that client will probably run up data of it, so actually, when I say "testing," we are using relatively small bits of information.

We are running 100 of their claims through it at a time just to make sure that the system seems to be working correctly.

I am speculating on part of this, particularly as it applies to Cerner. But it is speculating having guys that have been in that environment.

That the prime hit deals with the software vendors. So I would imagine now, Cerner has been in there.

The prime is gone. They do not have to deal with an ex-vendor.

No one knows who it is going to be. If CSC picks it up, I could easily see them saying they are going to use iSOFT, right because that is what they are using in the three northern regions.

If BT picks it up, they are still using Cerner in the central region, so I could see them using Cerner. And if it is somebody else, God only knows what they will use.

But they do, if hospitals are already with the version running that is pretty good, I mean, it gets most maybe not everything the NHS was looking for, but it is functioning and the hospitals are operating under it et cetera. In terms of us, we are absolutely vendor neutral.

We actually started with Fujitsu when they were going to install IDX and we were advising them as to how to do the implementation. We actually did the original implementation plan for IDX in the Southern region.

There is definitely opportunity. A year ago we opened an office in Germany.

There was a client in Europe that purchased a German software company that had a software product for hospitals in Germany. And we have been working with them since then.

In most of the rest of Europe, it is a socialized medical system. So that there are vendors that are providing them with services and the governments have relationships with various IT services companies.

I think the door of opportunity for us is and we truly believe this is going to happen when the rest of the countries in Europe begin to put in more sophisticated software, perhaps when they are running current. There is some sophisticated software, but by and large, the software that is probably state of the art is more from the United States.

So as they do that, and European competitors have no knowledge of that software, that is a big opportunity for us to go in and open up, a health care practice in one of the other countries. I have heard a lot of speculation that the primes all believe that that is going to happen.

I do not know why. One of the primes was convinced a couple of years ago that Portugal would be the next country.

I think it would be difficult for us to predict that on a kind of hit-and-miss basis, to open and office in Portugal hoping that they make the change first because it is partially a financial decision. It is partially based upon when the UK looks like it is done.

You know, often the Europeans on various things including IDOL and ISO, et cetera. The British actually went through the pains of working it out, and when it was working fine, then Europe began with it.

And I suspect that is what will happen here, too.

Thank you. In closing, I would like to repeat that our strategy is to continue to increase CTG's solutions business, particularly in our health care vertical, by being opportunistic in growing our staffing business.

To maintain the strong momentum in our solutions business, we are stepping up our sales and marketing activities while making additional investments in developing unique and innovative solutions to meet customer needs. As the solutions part of our business grows.

We look forward to further earnings growth and margin expansion. I would like to thank you for your continued support and for joining us this morning.

Have a great day.