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Five analysts and top management from four sector firms examine the human capital management sector in this special 54-page Human Capital Management issue from The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info483.htm.

TWST: Mark, what’s your outlook for IT, and which companies are most closely tied to this space? What are some of the strategies that the companies are using to get through this difficult period?

Mr. Allen: I’m a bit more bullish on the IT staffing space. As pointed out earlier, this was a tech-led recession. So there is a school of thought that says the tech spend cycle has been in the tank longer than the general economy, and consequently it may actually come out a bit quicker. Obviously, technology continues to change, and companies continue to be interested in utilizing technology for competitive advantage. All the deferred project activities are arguably creating some level of pent-up demand. I would agree that there definitely has been widely documented dissatisfaction with some of the technology projects of the late 1990s — a lot of spend, no payback, that kind of thing. So I think it’s basically anybody’s guess as to when the purse strings loosen on some of the tech cap spending projects, but we think that it’s really just a question of when, not if. In terms of the plays on IT staffing, we think that the best play there at this point in time is MPS Group. It’s a company that does about $1.5 billion in revenue, and roughly $1.1 billion of that is in IT services. So that would be our top pick to try to play the cycle in IT contract staffing.

TWST: Mark, at last year’s Roundtable you suggested that in a soft economy, executive performance problems can be unmasked, which can lead to a higher level of executive turnover. Did that happen, and if so, have the search firms benefited from this?

Mr. Allen: I think that that has played out to some extent. On a routine basis, you can pick up a newspaper and read where a company is initiating a search for a new officer of this, that or the other. To keep it in perspective, you should realize that there was extraordinary growth in the industry in 2000 as a lot of capital was coming into new business startups that required a suite of officers to run them. Many of the search companies were up more than 30% on an organic basis year over year in 2000, so you came into 2001 with an extremely difficult comparison. And then, obviously, with the economy being weak, that created a very sharp downturn in business for those executive search companies.

TWST: Mark, what’s at the top of your list?

Mr. Allen: I’m going to give you a name that is, again, somewhat defensive in nature. It’s in the healthcare area, a company called Cross Country (Nasdaq:CCRN). They supply traveling nurses to hospitals.

TWST: Is there a second one, Mark?

Mr. Allen: I’ll throw out what would be a countercyclical idea. We’ve definitely heard some sentiment or skepticism or concern relative to the timing of the recovery in the economy, and I follow a small company called Right Management Consultants (Nasdaq:RMCI), which fits in here. Essentially, this company provides outplacement services, primarily to middle management executives who have been laid off. It provides help in terms of coaching and finding a new job. It’s a service that’s basically paid for by the former employer. And, obviously, in the wake of the events of September 11, corporate layoff activity has escalated sharply, and their business, at least over the next three quarters, we think, is going to be extremely strong on a year-over-year basis.

This special issue includes:

1) Human Capital Management - In an in-depth (16,600 words) Analyst Roundtable, Mark W. Allen, Managing Director at SunTrust Robinson Humphrey Capital Markets, Randall A. Mehl, Director at Robert W. Baird & Co., Brandt Sakakeeny, Director at Deutsche Banc Alex. Brown, Inc. and Adam Waldo, Senior Vice President at Lehman Brothers, examine the outlook for the sector including the effect of Fed rate cuts, investment approach and share specific stock recommendations.

2) Human Capital Management - In an in-depth (4,900 words) Analyst Interview, Mark S. Marcon, Analyst at Wachovia Securities, examines the outlook for the sector and shares specific stock recommendations.

3) The TWST confidential Off-The-Record survey of management performance of seventeen sector firms asked market insiders about the ability of management teams to create shareholder value.

4) CEO interviews (average 2,500 words). Top management of four sector firms examine the outlook for their firm and the sector.