Human Resources: Hudson Highland Group Reports 2006 Third Quarter and Nine Month Results

NEW YORK, NY - October 31, 2006 - Hudson Highland Group, Inc. (Nasdaq: HHGP), a leading provider of permanent recruitment, contract professionals and talent management services worldwide, today announced financial results for the third quarter and nine months ended September 30, 2006.

2006 Third Quarter Highlights

The sale of Highland Partners was completed effective on October 1, 2006 and its results are treated as discontinued operations in the third quarter 2006 financial statements for all periods presented. Other than net income, the financial information discussed herein refers to continuing operations only.

Revenue from continuing operations of $352.5 million, an increase of 3.3 percent from $341.3 million for the third quarter of 2005
Gross margin from continuing operations of $127.7 million, or 36.2 percent of revenue, an increase of 5.8 percent from $120.7 million, or 35.4 percent of revenue, for the third quarter of 2005
Adjusted EBITDA from continuing operations of $12.1 million, or 3.4 percent of revenue, an increase of 101.1 percent from $6.0 million, or 1.8 percent of revenue, for the third quarter of 2005
EBITDA from continuing operations of $10.0 million, or 2.8 percent of revenue, an increase of 66.1 percent from $6.0 million, or 1.8 percent of revenue, for the third quarter of 2005
Income from continuing operations of $4.0 million, or $0.16 per basic share and diluted share, compared with $0.0 million, or $0.00 per basic and diluted share, for the third quarter of 2005
Net income of $4.3 million, or $0.18 per basic share and $0.17 per diluted share, compared with net income of $1.2 million, or $0.05 per basic and diluted share, for the third quarter of 2005

"After a difficult first half of 2006, the company set a solid foundation for the future with its strongest quarterly adjusted EBITDA performance since the 2003 spin-off. Hudson Americas regained profitability, while our international operations showed continued improvement in EBITDA," said Jon Chait, chairman and chief executive officer.

"We will continue to focus on lowering the cost base to achieve greater operating leverage to drive profit growth in our core markets," said Mary Jane Raymond, executive vice president and chief financial officer. "Actions under our restructuring plan are a fundamental part of this effort and should produce benefits in 2007."

Sale of Highland Partners

Effective on October 1, 2006, the company completed the sale of its Highland Partners executive search business to Heidrick & Struggles International, Inc. Highland Partners results in the third quarter of 2006 are included in the consolidated financial statements as discontinued operations, contributing $0.3 million in net income. Revenue in the quarter of $13.7 million was down 11 percent from the third quarter of 2005, while EBITDA reached $1.0 million, or 7.4 percent of revenue, down from $1.5 million, or 9.7 percent of revenue, in the year ago period.

The company's third quarter guidance included Highland Partners' results.

Guidance

The company currently expects fourth quarter revenue of $335 - $350 million at prevailing exchange rates, and EBITDA of $10.5 - $12 million, including $2 million of restructuring charges, compared with revenue of $337 million and EBITDA of $4.5 million in the fourth quarter of 2005.

2006 Nine Month Results

For the first nine months of 2006, Hudson Highland Group reported revenue from continuing operations of $1.0 billion, up 0.2 percent from $1.0 billion for the same nine-month period last year. Net loss was $3.2 million, or $0.13 per basic and diluted share, compared with a net loss of $1.0 million, or $0.04 per basic and diluted share, for the same nine-month period last year.

Conference Call / Webcast

Hudson Highland Group will conduct a conference call tomorrow Wednesday, November 1, 2006 at 9:00 AM EST to discuss this announcement. Individuals wishing to participate can join the conference call by dialing 1-800-374-1532 followed by the participant passcode 8713535 at 8:50 AM EST. For those outside the United States, please call in on 1-706-634-5594 followed by the participant passcode 8713535. Hudson Highland Group's quarterly conference call can also be accessed online through Yahoo! Finance at www.yahoo.com and the investor information section of the company's website at www.hhgroup.com.

About Hudson Highland Group

Hudson Highland Group, Inc. is a leading provider of permanent recruitment, contract professionals and talent management services worldwide. From single placements to total outsourced solutions, Hudson helps clients achieve greater organizational performance by assessing, recruiting, developing and engaging the best and brightest people for their businesses. The company employs more than 3,600 professionals serving clients and candidates in more than 20 countries. More information is available at www.hhgroup.com.

Safe Harbor Statement

This press release contains statements that the company believes to be "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included in this press release, including those under the caption "Guidance" and other statements regarding the company's future financial condition, results of operations, business operations and business prospects, are forward-looking statements. Words such as "anticipate," "estimate," "expect," "project," "intend," "plan," "predict," "believe" and similar words, expressions and variations of these words and expressions are intended to identify forward-looking statements. All forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These factors include, but are not limited to, the impact of global economic fluctuations on temporary contracting operations; the cyclical nature of the company's mid-market professional staffing businesses; the company's ability to manage its growth; risks associated with expansion; risks and financial impact associated with disposition of non-strategic assets; the company's reliance on information systems and technology; competition; fluctuations in operating results; risks relating to foreign operations, including foreign currency fluctuations; dependence on highly skilled professionals and key management personnel; risks maintaining professional reputation and brand name; restrictions imposed by blocking arrangements; exposure to employment-related claims, and limits on insurance coverage related thereto; government regulations; restrictions on the company's operating flexibility due to the terms of its credit facility; risks associated with the remediation work being performed on the company's PeopleSoft system; and the company's ability to maintain effective internal control over financial reporting. Additional information concerning these and other factors is contained in the company's filings with the Securities and Exchange Commission. These forward-looking statements speak only as of the date of this press release. The company assumes no obligation, and expressly disclaims any obligation, to review or confirm analysts' expectations or estimates or to update any forward-looking statements, whether as a result of new information, future events or otherwise.

Financial Tables in Attachment

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