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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended DECEMBER 31, 2003

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
Not Applicable

         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 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 an accelerated filer (as defined in Rule 12b-2 of the Act).
YES  X  NO      

         The aggregate market value of the voting stock held by non-affiliates of the registrant as of June 30, 2003 was $66,650,122 based upon the closing price of $1.55 for such stock as reported by the New York Stock Exchange on such date. Solely for purposes of this calculation, persons holding of record more than 5% of the Company's stock have been included as "affiliates."

COMMON STOCK, $.001 PAR VALUE — 73,625,322 SHARES OUTSTANDING AS OF FEBRUARY 27, 2004

DOCUMENTS INCORPORATED BY REFERENCE

SITEL CORPORATION AND SUBSIDIARIES

TABLE OF CONTENTS

Forward-Looking Statements

 We make statements in this report that are considered forward-looking statements within the meaning of the Securities Exchange Act of 1934. Sometimes these statements will contain words such as "believes," "expects," "intends," "should," "will," "plans," and other similar words. These statements are not guarantees of our future performance and are subject to risks, uncertainties, and other important factors that could cause our actual performance or achievements to be materially different from those we project. These risks, uncertainties, and factors include, but are not limited to: reliance on major clients, conditions affecting clients' industries, clients' budgets and plans, unanticipated labor, contract or technical difficulties, delays in ramp up of services under contracts, reliance on major subcontractors and strategic partners, risks associated with managing a global business, fluctuations in operating results, reliance on telecommunications and computer technology, dependence on labor force, industry regulation, general and local economic conditions, competitive pressures in our industry, foreign currency risks, the effects of leverage, dependency on credit availability, restrictions imposed by the terms of indebtedness, and dependence on key personnel and control by management.

 Given these uncertainties, you should not place undue reliance on these forward-looking statements. Please see the other sections of this report and our other periodic reports filed with the Securities and Exchange Commission for more information on these factors.

PART I
Item 1. Business

General

 References in this report to "we" and "our" are to SITEL Corporation and its subsidiaries, collectively.

 We are a leading global provider of outsourced customer support services. We specialize in the design, implementation, and operation of complex, multi-channel contact centers to assist our clients to acquire, serve, grow, and increase the value of their customers. We support the Customer Relationship Management (CRM) strategies of many of the world's leading brands primarily in the automotive, cable, consumer products, financial services, insurance, internet service provider, technology, telecommunications, and utilities sectors. By leveraging world-class operations across our global platform of people, processes, and technology, SITEL provides customer acquisition, customer care, technical support, and risk management services on an outsourced basis to help clients serve their customers and build greater brand loyalty. We also provide operational and information technology professional services for both outsourced and in-house contact centers focused on delivering productivity improvements and cost efficiencies.

 Founded in 1985, we have grown to include operations in North America, Europe, Asia Pacific, and Latin America. Operating from a business model structure where thirty-one business units serve over 250 clients around the world, the Company sells and operates locally while leveraging our global experience and expertise on behalf of multinational clients. We have approximately 31,000 employees worldwide that represent many of the world's leading brand names. We operate over 22,000 workstations in 81 contact centers located in 23 countries. We serve clients' customers in 53 countries communicating in more than 25 languages and dialects.

 We operate our contact centers based on the core belief that people do business with people, a reality that persists even in the age of anonymous online communications. Our customer support services are designed to enhance the quality of interaction at every stage in the customer lifecycle, from identification and acquisition of new customers, to customer service for existing customers, to the provision of technical support, help desks and assistance in managing accounts receivable. Capitalizing on our experience in operating contact centers, our operational and technology professionals provide design, implementation and operation services to both outsourced and in-house contact center operators to optimize every aspect of their day-to-day contact center operations. Our value added services allow customers to select their preferred channel of communication, including voice, web, e-mail, fax, and wireless interactions.

Industry Overview

 Our industry has evolved from outsourcers providing customer services for outbound U.S. customer acquisition to world-wide inbound customer support services, including technical help-desk services and business process solutions. The industry has also evolved from primarily a low-technology, single-facility environment to supporting multi-national corporations' customer and back office processing from large, full service, multi-channel often inter-connected contact centers located around the world. Today, companies are increasingly focused on optimizing their brands through better, differentiated customer service as well as the value of their customer relationships through cross-sales of additional products. Fueling this trend is the continued growth in consumer use of the Internet and e-mail, and

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the increasingly remote nature of customer interactions. Companies now face the business imperative to deliver consistent levels of quality customer service regardless of the channel of communication chosen.

 Contact center-based customer relationship management activity is becoming central to the way leading organizations choose to enhance customer loyalty and retention. IDC, a respected industry analysis group, estimates that the worldwide contact outsource business will grow from $39 billion in the year 2003 to $71 billion by the year 2007 or an average increase of 12.7% per year. Corporations are increasingly shifting key business processes from internal operations to outsourced partners. The business process outsourcing momentum is creating opportunities for the contact center outsourcing market. The industry is showing corporations that processes can be improved resulting in higher outcomes for the corporations. This trend has been further fueled by the growing complexity of integrating technology and communication. We expect to see the market increase as companies focus on their core competencies and rely on service providers like SITEL to deliver comprehensive contact center solutions. The contact center outsourcing industry continues to establish offshore and nearshore locations to serve clients seeking diversified labor markets. This trend is expected to continue.

Our Business

 SITEL designs, builds, and operates contact centers to deliver integrated customer interaction solutions. Our strategy for aligning with our clients involves mature methodologies centering around these three key phases of program development and operation. And because some clients require different levels of support during each of these phases, we are able to leverage our global experience and expertise in local markets to tailor a solution and delivery model as needed.

 SITEL offers a variety of outsourced customer interaction solutions covering each stage of the customer lifecycle – acquisition and sales; care and retention; technical support; risk management (collections); and back office processing. Our methodology provides solutions that are market-ready yet customized, based upon the specific requirements of our clients. We have developed industry-specific competencies that allow us to respond to unique demands and opportunities in specific vertical markets. Our multi-tiered approach to client engagement for both business-to-customer and business-to-business (B2B) programs enables us to align our solution as closely as possible with our clients' unique business goals.

 Each of our solutions showcases our ability to add value to our clients' primary business objectives by:

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offering customers a consistent method of contact, through the communication channel of their choice,

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improving brand image through consistent and accurate handling of customer contacts,

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providing customer service professionals with access to accurate, up-to-date information, driving timely customer issue resolution,

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capturing customer service information for analysis and conversion into market opportunities,

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providing a flexible and scalable state-of-the-art operating environment that can accommodate dynamic shifts in volume, workload, and associated staffing requirements,

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leveraging a sophisticated network of contact centers in 23 countries, including cost-competitive offshore and near shore locations such as Canada, India, Jamaica, Morocco and Panama,

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integrating operations platforms, enabling work inter-flow between outsourced customer contact centers, other third party vendors, and internal centers as necessary,

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supporting multiple communication channels (telephone, web, e-mail, fax, traditional mail, etc.), providing customer interaction processes that are both proactive and reactive to customer demands,

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implementing self-service strategies and tools to further improve performance and reduce costs through increased efficiency.

Organizational Structure

 SITEL is unique within the outsource contact center industry by providing customer support services through an organization focused locally on our clients and their customers for sales and operational delivery. Thirty-one business units provide client centric customer support services using best practices gained from our global experience. By leveraging our global expertise and serving clients locally, we are able to perform better for our clients. Individual business units know their markets, their geographies, the local rules and regulations and are best positioned to perform and relate to companies in their local market.

 Clients served across business units are managed by a global accounts management team, but served by the individual business units. More and more companies are consolidating the number of outsource contact center vendors and contracting with a company that can serve them across geographies. Our global sales team is responsible for developing and implementing customized industry-specific customer management solutions to prospective multi-national clients.

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The Services We Offer

 The Company provides innovative customer support services and solutions. We view every customer contact as an opportunity to build our clients' brand equity and strengthen relationships with our clients' customers. We offer a suite of added-value customer support services addressing every stage of the customer or product lifecycle, as well as operational and technology professional services that are designed to optimize every aspect of the day-to-day operation of both outsourced and in-house contact centers. We specialize in providing customer acquisition, customer care, technical support and risk management services using multiple communication channels encompassing phone, e-mail, web and chat to assist clients to support and grow their customers. SITEL's business units operate 25 customer support centers in the United States, 7 in Canada, 30 in Europe, 5 in Asia Pacific, 12 in Latin America, and 2 facilities in Jamaica and India. SITEL's customer service professionals (CSPs) are specially trained in the applicable product and/or service they are supporting. The CSPs act as a transparent extension of the client in acquiring and serving the client's customer. Each of our services leverage our contact center expertise and are tailored to meet the client's unique business requirements. We offer the following services:

Customer Care

 Focused on enhancing the customer experience, our customer care services range from utilizing self-service products for frequently asked questions, to using web chat sessions for complex installation problems, to employing highly trained technicians for product support. We specialize in the design and delivery of complex, multi-channel solutions, including the use of cost competitive locations. We act as the voice of the customer to our clients, providing valuable, real time feedback on new products or campaigns. Our customer care services include: complaint and issue resolution, change of personal details and billing information, thank-you or other client-initiated information contacts, reservations, loyalty initiatives, investor account inquiries, government information, dealer location contacts, insurance claims processing, fraud detection/prevention calls, back office requests, such as connecting a new line, disconnecting service and requesting maintenance support, warranty call handling, and administrative support regarding a customer's policy, lease or account.

Customer Acquisition

 Our customer acquisition services include prospect identification, campaign management, lead generation, and fulfilment. In coordination with our clients' sales objectives, we implement and execute marketing campaigns using multi-channel communications in coordination with advertising and promotional sales programs. By tracking customer value over time against the cost of acquisition, we help our clients improve the quality and value of new customers while reducing the total cost of acquisition. We help clients find and win customers through: list building, outbound sales, inbound sales or order taking, lead generation, direct response television/bureau, product information requests related to potential sales, subscription renewals, and database cleaning and updating.

Technical Support

 Targeted at industries with dynamic product lifecycles, like high technology, we provide a broad range of technical support services focused on achieving measurable, total customer satisfaction. We employ technically trained and dedicated teams on an integrated, multi-channel platform, to provide comprehensive technical product support. We tailor the technical support processes to our clients' needs, including required activities, escalation procedures, and system level reporting. By analyzing product-related call patterns gathered from the technical support function, we are able to provide additional insight into future product development initiatives. In providing technical support services, we handle troubleshooting calls, respond to software and hardware problems, provide support for Internet service problems, manage corporate help desks, and provide warranty or post-warranty support.

Risk Management

 We provide international receivables management programs for large corporations. We believe in a consultative approach, sharing industry-wide best practices to tailor a unique solution for each of our client's specific needs. We design programs to ensure optimal loss mitigation while emphasizing customer retention. Our risk management services include: pre- and post-charge-off collections, early fraud identification, credit card activations, property recovery programs, skip tracing, and disaster prevention and recovery.

The Communication Channels We Use

 We use the telephone, fax, white mail and the Internet as means of communication to provide the services we offer. Each of these communication channels is described below:

 We handle approximately 525 million customer interactions annually via the telephone, email, webchat and other channels. We have been making and taking customer contacts on behalf of Global 1000 companies since our founding more than eighteen years ago.

 As the Internet has become an increasingly important communications medium between our clients and their customers, we have integrated the Internet into our contact center solutions.

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 Our customer service professionals provide timely, knowledgeable, and comprehensive replies to all incoming contacts whether by phone, e-mail or web chats in support of our clients' customer service and technical support. Our contact center platform can also provides automated e-mail response based on key word recognition.

 Using a combination of content creation, knowledge management and carefully tailoring client web-sites, the Internet can enable customers to resolve their problems without human assistance. We are actively working with our clients to incorporate self-service capabilities into our solutions to improve customer satisfaction and reduce cost. Examples of self-service support are customers accessing the answers to frequently asked questions via an 'intelligent' search of a data or "knowledge base" or prospective customers completing online insurance applications that are subsequently reviewed by our licensed insurance service professionals.

Markets and Clients

 Our business units implement and operate customized industry-specific customer support solutions by geography and by specific vertical markets. They have primary responsibility for operations, sales and marketing efforts in their defined area. Within this framework, we focus on large and medium size corporations in the automotive, consumer products, financial services, insurance, technology, telecommunications and ISP and cable, and utilities sectors. These industries accounted for approximately 15%, 12%, 18%, 9%, 20%, 15%, and 7%, respectively, of our 2003 revenue. Sales in other industries, including travel, healthcare, government and various others, accounted for 4% of 2003 revenue. We serve over 250 clients in 23 countries. Note 9 to the Consolidated Financial Statements provides information about our revenue by geographic region. Our top 20 clients accounted for 71.2% of our revenue in 2003, and include multiple independently managed business units of General Motors Corporation. These General Motors business units were responsible for 21.2% of our total revenue in 2003. We did not have any other clients under common control that generated more than 10% of our total revenue for the year ended December 31, 2003.

The Industries We Serve

 We provide contact center solutions primarily across the following industries:

Automotive

 We provide customer support services for several automotive manufacturers including the largest automotive company in the world. Our services support our clients' brands and promote customer satisfaction and loyalty. Services are performed through all communication channels and include general inquiries, dealer questions, warranty questions and support.

Consumer Products

 The consumer products industry encompasses a large variety of companies including retail, manufacturing, service, and publishing companies. In addition to traditional product and service support solutions, we also provide specialized service processes such as lead generation, managing product recalls, and performing quality surveys and market analysis.

Financial Services

 New product and service offerings have expanded our opportunities in this fast paced industry. We work with financial services companies worldwide to provide a wide range of customer support services including responding to credit card inquiries, transferring balances, and taking and processing loan applications. Specialty processes we provide our clients in the financial services industry include managing loyalty programs, generating leads for new customers, and managing customer retention programs.

Insurance

 We are a leader in providing a broad range of services to the insurance industry. We have over 385 in-house agents holding in excess of 12,000 licenses. We direct market fully underwritten property & casualty and life & health products. We also support the accidental death and disability, credit life, and supplemental health insurance markets. Our customer support services for the insurance industry include all of the traditional services, such as customer inquiries, policy changes, claims processing and full back-office support.

Technology

 We provide technical sales, technical support and customer support services for technology sector companies including computer hardware manufacturers, software publishers, and PDA and other wireless device suppliers. We have developed processes supporting the technology industry including processes for product launches, complete sales and account management programs, corporate help desk, and warranty or post-warranty sales and support programs.

Telecommunications, ISP and Cable

 We provide a full range of sales and customer service activities to domestic and international long distance providers, local exchange carriers, cellular and PCS providers, internet service providers, telecommunications equipment manufacturers, and cable and satellite TV companies. In addition to traditional product and service support solutions, we deliver advanced order management, provisioning, and B2B support, and have developed specific end-to-end solutions for Internet service providers and wireless service providers.

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Energy and Utilities

 With the deregulation of the utility industry, companies are expanding their services and emphasizing the growth of their customer base. We provide services to public and private energy and utility companies, including electric power, natural gas, water and integrated energy providers. In addition to traditional customer support services, we have developed several processes to support the industry including: lead generation, loyalty campaign programs, appointment setting and scheduling, database management programs, and end-to-end solutions for supporting the customer from connection to payment.

Information Technology

 We use industry-standard software from Microsoft, Oracle, and others across the administrative functions of our business units. Within industry sectors, we use industry-specific contact processing application systems. We have designed and implemented client (or industry) specific applications to provide highly customized solutions to clients' specific requirements.

 We utilize state-of-the-art technology (UNIX and NT architecture) with Windows 95/98/2000/XP and NT-based HP/Compaq, Dell and IBM workstations, predictive dialers and automated call distributors. Our customer service professionals have the tools to initiate and receive effectively and efficiently millions of service transactions per month.

 SITEL's telephony platforms (Avaya and Nortel), partnered with a strong carrier network (AT&T and BT) and local telephony providers provide a multitude of options when routing contacts (voice and data) over the globe and supporting business continuity plans. These platforms support such features as VoIP, Best Services Routing (Avaya), skills-based routing and schedule adherence (IEX & TCS workforce management suites), Digital Voice Recording (Nice and Tantacom), and Quality Monitoring and Assurance (IEX).

Human Resource Management

 Efficient management and operation of large-scale contact center solutions is a highly people intensive business. One of our core competencies is managing a diverse, worldwide workforce. We place great emphasis on our integrated human resource management strategies, including the recruitment, training, development, and retention of our employees at all levels of the organization.

 We seek to locate customer contact centers in communities and cities with favorable workforce demographics and populations with necessary language skills. We are committed to equal employment opportunity in every market we serve.

 To build rewarding careers for our employees and enable effective planning for future growth:

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We provide a learning environment that delivers instructor led and on the job training as well as e-learning opportunities through SITEL University;

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We focus on developing employee skills and promoting from within so that employees can take on challenges that help the company group both domestically and globally;

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We employ a global reward and recognition program that is instrumental in keeping employees motivated and focused on goals and objectives.

 As of December 31, 2003, we had approximately 31,000 employees. In our European region, employees in Belgium, Germany, Sweden, and Spain are within the scope of government sponsored collective bargaining agreements and are represented by either a labor union or a statutory work council arrangement. In countries with labor unions or work councils, our ability to reduce our workforce or wage rates is subject to agreement or consultation with the appropriate labor union or works council. We consider relations with our employees to be good.

Offshore

 The use of offshore facilities to serve clients' customers from a location that offers reliable cost efficient labor is a growing trend in the industry. Our global locations include Jamaica, India, Panama, and Canada which serve English speaking customers, Mexico, Colombia and Panama serve Spanish-speaking customers and centers in Morocco and Canada serve French-speaking customers.

Competition

 We are one of the largest independent companies executing contact center solutions. Our largest direct competitors include:

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APAC Customer Services, Inc.,

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Convergys Corporation,

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Sykes Enterprises, Incorporated,

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TeleTech Holdings, Inc., and

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West Corporation.

 The industry in which we compete is competitive and fragmented. In addition to the companies listed above, we compete with a variety of companies that include niche providers, large conglomerates and consulting companies. We also compete with in-house customer service departments throughout the world. In-house departments continue to comprise the largest segment of contact center expenditures.

 We believe we are in a leadership position in terms of global presence, operational experience, solutions

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provided, industries served and large-scale project implementation.

Reporting Segments and Geographical Information

 Information regarding reporting segment and geographical information is set forth in Note 9 to the Consolidated Financial Statements.

Available Information

 We make available, free of charge through our Internet website at http://www.sitel.com, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission.

Government Regulation

 The nature of our business makes us subject to various laws and regulations that primarily concern teleservices, web-services, insurance agencies, collection agencies, and the collection and use of private consumer data.

 In the United States, various federal and state statutes and regulation impact each of these areas.

 At the federal level, outbound and inbound telephone sales practices are subject to the Federal Telephone Consumer Protection Act of 1991 and the Federal Telemarketing Consumer Fraud and Abuse Protection Act of 1994. The Federal Trade Commission (FTC) and the Federal Communications Commission (FCC) have also each promulgated regulations affecting outbound telephone sales practices and, to a lesser extent, the upselling portion of inbound calls.

 During 2003, both the FTC and FCC substantially broadened their respective regulations governing telephone sales practices. In addition to continuing prior regulations such as those prohibiting misrepresentations and restricting calling times, certain uses of automated telephone dialing equipment and calls to consumers requesting not to be called by particular companies, the new FTC and FCC regulations affecting our business adopted the following key provisions:

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A national "do not call" registry for consumers not wanting unsolicited telephone sales calls, with exceptions for pre-existing business relationship or prior express consent and a safe harbor for error when various requirements are satisfied

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Certain mandatory disclosures in all outbound telephone sales calls and in the upselling portion of inbound calls

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Additional disclosures for telemarketing offers involving negative options

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Express verifiable consent to ensure authorization for certain transactions depending on payment method

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Additional restrictions when a seller or telemarketer has pre-acquired account information, with further restrictions for free-to-pay conversion offers with pre-acquired account information

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Prohibition on call abandonment beyond a safe harbor of 3% and other related restrictions

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Transmission of caller identification information to consumers' caller identification service

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Certain record keeping requirements for 24 months

 In addition to the FTC and FCC, state attorney generals also are permitted to file enforcement actions against sellers and telemarketers for violations of these regulations. Consumers may also file civil actions for violations adversely affecting them. Many states have enacted or are considering enacting similar or more restrictive provisions affecting telephone sales practices.

 There are many federal and state laws and regulations in the U.S. that govern web-services, collection agency licensing and practices, and the collection and use of private consumer data. Some key federal laws affecting our business include the Gramm-Leach-Bliley Act, Health Insurance Portability and Accountability Act of 1996, Fair Debt Collection Practices Act and Fair Credit Reporting Act. Concerns about "right of privacy" issues have frequently been at the forefront of regulatory developments due to the dramatic increase in the availability of information about consumers as a result of technological advances.

 Outside the United States, the other countries where we have substantial operations generally have not yet enacted detailed regulatory frameworks for teleservices, although a number of countries are considering doing so. The European Union (EU) has adopted various directives impacting the teleservices industry, which EU member countries are in various stages of implementing.

 Many countries, including those in the EU, have enacted or proposed laws that regulate consumer privacy and the collection and use of consumer data. Many of these laws are based on the privacy principles established by the Organization for Economic Co-operation and Development (OCED) in its Guidelines on the Protection of Privacy and Transborder Flows of Personal Data. These laws typically limit the use and disclosure of personally identifiable information to specified, lawful purposes; impose rules on the transfer and processing of personal data; and provide individuals with a right to access and correct inaccurate personal information.

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 The various industries we serve within the U.S. or internationally are subject to differing degrees and types of government regulations. Although compliance with these regulations is generally the legal or contractual responsibility of our clients, we are sometimes directly affected as well. For example, our employees who sell certain U.S. insurance products are typically required to be licensed by state insurance commissions and may also be required to participate in regular continuing education programs.

 We generally rely on our clients and their advisors to develop the scripts and client information we use in making or receiving customer contacts. We typically require our clients by contract to indemnify us against claims and expenses arising from their products or services, scripts and directives.

 Compliance with applicable laws, regulations and industry guidelines to date has not had a material adverse effect on our global business. In the U.S., compliance with the newly amended FTC and FCC regulations and the increasing regulation of our teleservices industry at the state level has imposed significant additional costs and burdens, especially upon our outbound telephone sales business. However, our North American outbound telephone sales business represents only a relatively small percentage of our overall worldwide business, about 6.7% of our 2003 global revenues, down from 9.9% in 2002.

 Other proposed laws and regulations are in early stages of consideration, and we cannot yet determine the impact those might have on our business. Governments, trade associations, and industry self-regulatory groups may enact even more burdensome laws, regulations and guidelines, which might directly affect our business, or affect our clients' businesses and thus indirectly our business, in material and adverse ways. Existing and future laws and regulations may also require our clients to change their products or services in ways that could diminish the commercial viability of those products or services or require us to modify our contact center solutions to continue effectively meeting our clients' needs.

Quarterly Results and Seasonality

 We have experienced, and expect to continue to experience, quarterly variations in our results of operations mostly due to:

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the timing of our clients' customer relationship management initiatives and customer acquisition and loyalty campaigns,

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the commencement of new contracts and the discontinuance or termination of existing contracts,

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revenue mix,

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the timing of additional operating, selling, and administrative expenses to support new business, and

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the timing of recognition of incentive fees.

 We experience periodic fluctuations in our results of operations related to both the start-up costs associated with expansion and the implementation of clients' CRM activities. In addition, our business generally tends to be slower in the third quarter due to summer holidays in Europe.

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Item 2. Properties

 Our executive offices are located in Omaha, Nebraska.

 As of December 31, 2003, we operated company centers in various facilities that we lease and client centers that are on client premises as shown in the table below.

 *  centers in our joint ventures

 ** centers operated by subcontractors

 We contract and operate out of several client centers to support specific client initiatives. We believe our current facilities are adequate for our current operations, but additional facilities will be required to support growth. We believe suitable additional or alternative space will be available as needed on commercially reasonable terms.

Item 3. Legal Proceedings

 From time to time, we are involved in litigation incidental to our business. We cannot predict the ultimate outcome of such litigation with certainty, but management believes, after consultation with counsel, that the resolution of such matters will not have a material adverse effect on our consolidated financial position or results of operations.

 One of our clients has received letters from time to time containing an offer to license and suggesting that the client might be infringing certain patents related to computerized telephonic voice response systems without the license. The client has indicated that if any infringement occurred the client would seek contractual indemnity from us. In such an event, we would expect to seek contractual indemnity from certain of our vendors. Any such contractual indemnity we might obtain may not be sufficient to cover all of the costs of investigating and resolving such matter. We might also seek a license under the patents. Any such license may not be available under commercially reasonable terms. Any license costs would increase the cost of doing business in the future and may or may not be fully reflected in our pricing. To our knowledge, no litigation has been initiated against our client or us concerning this matter. At this stage, due to the inherent uncertainties, we are unable to predict whether this matter may have a material adverse effect on our business or on our financial condition or results of operation.

Item 4. Submission of Matters to a Vote of Security Holders

 Not applicable.

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Executive Officers of the Registrant

 Executive officers of SITEL Corporation at the date of this report are:

PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters

 Our common stock is traded on the New York Stock Exchange under the symbol SWW. The following table sets forth the high and low sale prices of our common stock for the quarters indicated, as reported by the New York Stock Exchange.

Shares Outstanding and Holders of Common Stock

 As of February 27, 2004, we had 73,625,322 shares of common stock outstanding and 594 record holders of our common stock.

Dividend Policy

 We have not declared or paid any cash dividends on our common stock since our inception. The Board of Directors currently intends to retain all earnings for use in the business for the foreseeable future. Furthermore, our revolving credit facility and Senior Subordinated Notes contain restrictions on the payment of cash dividends.

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Item 6. Selected Financial Data

 The following Selected Financial Data should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations beginning on the following page, the Consolidated Financial Statements beginning on page F-3, and the Notes to Consolidated Financial Statements beginning on page F-7.

(a)

We discuss asset impairment and restructuring expenses in Note 11 to the Consolidated Financial Statements.

(b)

We discuss the cumulative effect of a change in accounting for goodwill in Note 1 to the Consolidated Financial Statements.

(c)

During 2002, we adopted the provisions of SFAS 142, Goodwill and Other Intangible Assets, and ceased amortizing goodwill. If we had not amortized our goodwill during the three years ended December 31, 2001 our net income (loss) would have been $(19,138) in 2001, $15,753 in 2000, and $2,817 in 1999.

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

General

   References in this report to "we" and "our" are to SITEL Corporation and its subsidiaries, collectively.

 We are a leading global provider of outsourced customer support services. We specialize in the design, implementation, and operation of complex, multi-channel contact centers. We support the Customer Relationship Management (CRM) strategies of large corporations in North America, Europe, Asia Pacific, and Latin America. We provide customer acquisition, customer care, technical support and risk management services on an outsourced basis, as well as operational and information technology professional services for both outsourced and in-house contact centers. We serve clients primarily in the automotive, cable, consumer products, financial services, insurance, internet service provider, technology, telecommunications, and utilities sectors.

 In Management's Discussion and Analysis, we provide information about our general business risks, critical accounting policies and estimates, results of operations, financial condition and liquidity, and certain other matters affecting our operating results for the periods covered by this report.

 As you read this discussion and analysis, refer to our Consolidated Statements of Income (Loss), which present the results of our operations for 2003, 2002, and 2001, and are summarized on the following pages. We analyze and explain the differences between periods for the components of net income (loss) in the following sections. Our analysis is important in making decisions about your investment in SITEL Corporation.  

General Business Risks, Critical Accounting Policies and Estimates

  General Business Risks

 Our business success depends on our ability to efficiently deploy our human and capital resources in the delivery of services to our clients. Consequently, the needs of our clients may significantly impact our results of operations, financial condition, and liquidity.

 Our results of operations and operating cash flows may vary with periodic wins and losses of client contracts and with changes in the scope of client requirements. Our top 20 clients accounted for 71.2%, 68.4%, and 62.0% of our revenue in 2003, 2002, and 2001 and includes multiple independently managed business units of General Motors Corporation. These General Motors business units were responsible for 21.2%, 23.5% and 25.4% of our total revenue in 2003, 2002 and 2001. We signed agreements to extend until January 2005, two of our primary contracts with General Motors. We did not have any other clients under common control that generated more than 10% of our total revenue in 2003, 2002 and 2001. The financial failure of any of these clients or the loss of any or all of their business could have an adverse impact on our operating results.

 Our liquidity, including our ability to comply with debt covenants, may be adversely affected if we were to lose a significant client or as a result of significant changes in client demand if we are unable to efficiently re-deploy our human and capital resources.

 We have operations in many parts of the world and therefore our financial statements can be impacted by foreign exchange fluctuations. Fluctuations of currencies against the U.S. dollar can be substantial and therefore significantly impact comparisons with prior periods.

 In the following sections, we also discuss the importance of our critical accounting policies and the use of accounting estimates, and their potential impacts on our results of operations.

Critical Accounting Policies and Estimates

 The process of preparing financial statements requires the use of estimates on the part of management. These estimates involve judgments with respect to, among other things, future economic factors that are difficult to predict and are beyond management's control. As a result, actual results could differ from these estimates.

 Our significant accounting policies and practices are described in Note 1 to the Consolidated Financial Statements. Of those policies, we have identified the following to be critical accounting policies because they are the most important to the portrayal of our results of operations and financial condition, and they require

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management's most difficult, subjective, or complex judgments:

Revenue Recognition

 We recognize revenue as services are performed for our clients in accordance with Staff Accounting Bulletin (SAB) No. 101 "Revenue Recognition." We recognize revenue at the time services are performed based on an hourly, monthly, per call or per employee rate detailed in the client contract. A portion of our revenue is often subject to performance standards, such as sales per hour, average handle time, occupancy rate and abandonment rate. Our performance against such standards may result in bonuses or penalties, which are recognized as earned or incurred. In certain circumstances, we receive payment in advance of providing service. Accordingly, amounts billed but not earned under these contracts are excluded from revenue and included in deferred revenue and other in the consolidated balance sheet. Revenue for services performed under certain collection service agreements are recognized as the related consumer debts are collected and are calculated based upon a percentage of cash collected or other agreed upon contractual parameters.

Trade Accounts Receivable

 We report our trade accounts receivable net of an allowance for doubtful accounts, which represents management's estimates of the amount of our receivables that may not be collectible, net of recoveries of amounts previously written off. These estimates are based on a detailed aging analysis of accounts receivable, historical bad debts, client credit-worthiness, and changes in our client payment terms. The financial condition of our clients may deteriorate, which may require us to increase our allowance for doubtful accounts. We would record an increase in the allowance for doubtful accounts as operating, selling, and administrative expense in our consolidated statements of income (loss), which would reduce our results of operations.

Property and Equipment

 We record property and equipment at cost, and calculate depreciation using the straight-line method over the estimated useful lives of the assets, which range from 3 to 20 years. We amortize leasehold improvements and assets under capital leases on a straight-line basis over the shorter of the lease term or the estimated useful life of the asset. If the actual useful lives of these assets are less than the estimated depreciable lives, we would record additional depreciation expense or losses on disposal to the extent the net book value of such asset is not recovered upon sale.

Asset Impairment

 We evaluate long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Triggering events include a significant change in the extent or manner in which long-lived assets are being used or in its physical condition, in legal factors, or in the business climate that could affect the value of the long-lived assets. The interpretation of such events requires judgment from management as to whether such an event has occurred.

 Upon the occurrence of a triggering event, the carrying amount of a long-lived asset is reviewed to assess whether the recoverable amount has declined below its carrying amount. The recoverable amount is the estimated net future cash flows that we expect to recover from the future use of the asset, undiscounted and without interest, plus the asset's residual value on disposal. Where the recoverable amount of the long-lived asset is less than the carrying value, an impairment loss would be recognized to write down the asset to its fair value, which is based on discounted estimated cash flows from the future use of the asset.

 The estimated cash flows arising from future use of the asset that are used in the impairment analysis requires judgment regarding what we would expect to recover from future use of the asset. Any changes in the estimates of cash flows arising from future use of the asset or the residual value of the asset on disposal based on changes in the market conditions, changes in the use of the assets, management's plans, and the determination of the useful life of the assets could significantly change the recoverable amount of the asset or the calculation of the fair value and the resulting impairment loss, which could significantly affect the results of operations.

Goodwill

 We adopted the provisions of SFAS No. 142, "Goodwill and Other Intangible Assets" (SFAS 142), as of January 1, 2002. As a result of the adoption of this standard, we stopped amortizing our goodwill, including equity method goodwill, and completed the required impairment review. As a result of the impairment review, we determined that the goodwill in certain reporting units was impaired and we recorded a goodwill impairment loss of $18.4 million as a cumulative effect of an accounting change as of January 1, 2002.

 At least annually or more frequently, as changes in circumstances indicate, we will evaluate the estimated fair value of our goodwill. On these evaluation dates, to the extent that the carrying value of the net assets of any of our reporting units having goodwill is greater than their estimated fair value, we will be required to take additional goodwill impairment charges. We are required to make certain assumptions and estimates regarding the fair value of goodwill when assessing for impairment. Changes in the fact patterns underlying such assumptions and estimates could ultimately result in the recognition of additional impairment losses. Effective as of October 1, 2003, we completed the annual evaluation of

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our goodwill and determined no impairment charge was required.

Deferred Income Taxes

 We record deferred tax assets and liabilities using enacted tax rates in the jurisdictions in which we operate for the effect of temporary differences between the book and tax basis of assets and liabilities. If enacted tax rates change, we would adjust the deferred tax assets and liabilities, through the provision for income taxes in the period of change, to reflect the enacted tax rate expected to be in effect when the deferred tax items reverse. To the extent that we believe that recovery is not likely, we establish a valuation allowance to reduce the deferred tax assets to the amount that is more likely than not to be realized. The valuation allowance is based on our estimates of future taxable income by jurisdiction in which we operate, the period over which the deferred tax assets can be recovered and available tax planning strategies. A review of all available positive and negative evidence needs to be considered, including our current and past performance, the market environment in which we operate, the utilization of past tax credits, length of carryback and carryforward periods, and existing or prospective contracts that will result in future profits.

 Forming a conclusion that a valuation allowance is not needed is difficult when there is negative evidence such as cumulative losses in recent years in certain tax jurisdictions. Cumulative losses weigh heavily in the overall assessment. We have established valuation allowances for future tax benefits related to net operating losses incurred in certain federal, state and foreign tax jurisdictions for the year ended December 31, 2003. We expect to continue to record a valuation allowance on future tax benefits in certain tax jurisdictions until an appropriate level of profitability is sustained. Until an appropriate level of profitability is reached, we do not expect to recognize any significant tax benefits in future results of operations. If future taxable income is lower than expected or if expected tax planning strategies are not available as anticipated, we may record additional valuation allowance through income tax expense in the period such determination is made.

Contingencies

 We consider the likelihood of various loss contingencies, including tax and legal contingencies arising in the ordinary course of business, and our ability to reasonably estimate the amount of loss in determining loss contingencies. An estimated loss contingency is accrued when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. We regularly evaluate current information available to us to determine whether such accruals should be adjusted.

Results of Operations

 In this section, we discuss our operating results and the factors affecting them. We describe our general business risks, critical accounting policies, and estimates that are important to our operating results on the previous pages. Please refer to that discussion as you read this section.

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Components of Net Income (Loss)

 As you read this section, please refer to the following table that summarizes our income statement data on a percentage-of-revenue basis.

(a)

During 2002, we adopted the provisions of SFAS 142, Goodwill and Other Intangible Assets, and ceased amortizing goodwill. If we had not amortized our goodwill during the year ended December 31, 2001 our net loss would have been $(19,138).

2003 Compared to 2002

Revenue

 Revenue increased $76.3 million, or 9.9%, in 2003 compared to 2002. The changes in revenue by geographic region are shown in the following table:

 The decrease in North America revenue in 2003 compared to 2002 was due primarily to a $14.8 million decline in customer care and customer acquisition services we provided to a number of our clients partially offset by a $10.3 million increase in revenue by our technical support services and risk management business. The primary reason for the decrease in revenue is due to pricing pressure resulting from excess capacity in North America, created primarily by the movement of business offshore. The transfer of certain business to lower cost labor markets offshore results in lower revenue for the same volume of business.

 European revenue increased $106.1 million in 2003 compared to the same period in 2002. Higher sales volumes from new and existing clients and the implementation of multiple pan-European client accounts that commenced in early 2003 resulted in an increase in revenue of $61.3 million in 2003 compared to 2002. The weakening of the U.S. dollar versus the British pound and Euro accounted for the remaining $44.8 million of the increase.

 Asia Pacific revenue increased $4.8 million in 2003 compared to 2002. Excluding the impact of changes in foreign currency, revenue decreased $1.4 million compared to 2002 as a result of lower volumes.

 As a result of certain revisions in the governance of a joint venture, we reported our investment in certain Latin America affiliates using the equity method of accounting, rather than the consolidation method, effective October 1, 2002. As a result of the change in accounting, Latin America revenue declined $33.0 million in 2003 compared to 2002. The strengthening of the U.S. dollar accounted for a $0.7 million decrease in Latin American revenue in 2003 compared to 2002. Excluding

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the impact of the change in accounting and the impact of changes in foreign currency, Latin American revenue increased $3.7 million in 2003 compared to 2002 as a result of higher sale volumes.

Direct Labor and Telecommunications Expenses

 Direct labor and telecommunications expenses include the compensation of our customer service professionals and their first line supervisors and telephone usage expenses directly related to the production of revenue.

 Direct labor and telecommunications expenses as a percentage of revenue can vary based on the nature of the contract, the nature of the work, and the market in which the services are provided. Accordingly, direct labor and telecommunications expenses as a percentage of revenue can vary, sometimes significantly, from year to year.

 As a percentage of revenue, direct labor and telecommunications expenses increased to 58.7% in 2003 compared to 56.3% in 2002. Pricing pressure resulting from continuing excess capacity created primarily by movement of business offshore and the ramp costs of new programs in North America and Europe were the primary reasons for the increase in 2003 compared to 2002.

Subcontracted and Other Services Expenses

 Subcontracted and other services expenses include services provided to clients through subcontractors and other out-of-pocket expenses. Subcontracted and other services expenses in 2003 remained consistent compared to 2002.

Operating, Selling and Administrative Expenses

 Operating, selling and administrative expenses represent expenses incurred to directly support and manage the business, including costs of management, administration, technology, facilities, depreciation and amortization, maintenance, sales and marketing, and client support services.

 Operating, selling and administrative expenses increased $29.9 million, or 11.9%, in 2003 compared to 2002. The change in accounting of certain Latin American affiliates as described previously, reduced operating, selling and administrative expenses $6.9 million in 2003 compared to 2002. The weakening of the U.S. dollar compared to the primary currency in the jurisdictions in which we operate accounted for a $16.2 million increase in 2003 compared to 2002. Excluding the impact of the change in accounting and the impact of changes in foreign currency, operating, selling and administrative expenses increased $20.6 million in 2003 compared to 2002. As a percentage of revenue, operating, selling and administrative expenses increased to 33.2% in 2003 compared to 32.6% in 2002 primarily as a result of increased investments in infrastructure to support European expansions and increased costs associated with expanded sales programs.

Asset Impairment and Restructuring Expenses

 During 2003, in connection with the closure of our former headquarters facility and the closure of a contact center, we recorded asset impairment and restructuring expenses of $1.6 million, which consisted of the write-off of abandoned leasehold improvements of $0.4 million and for $1.2 million of scheduled payments of operating leases for which we will receive no future economic benefit. In addition, we recorded asset impairment and restructuring expenses of $1.4 million as a result of a revision to our estimate for non-cancelable lease payments associated with a previously announced facility closure.

 During 2002, we recorded additional restructuring charges of $1.4 million primarily associated with a revision to our estimate for non-cancelable lease payments associated with a facility closure in connection with the 2001 restructuring plan.

Operating Income

 Operating income decreased $18.1 million in 2003 compared to 2002 due to the factors discussed above.

Interest Expense, Net

 Interest expense, net of interest income, increased $0.6 million in 2003 compared to 2002 as a result of higher average borrowings.

Equity in Earnings of Affiliates

 The decrease in equity in earnings of affiliates in 2003 compared to 2002 primarily relates to reduced earnings from our India joint venture due to changes in client mix and higher ramp-up costs.

Other Expense, Net

 Other expense, net, decreased $0.4 million in 2003 compared to 2002. The decrease was primarily a result of foreign currency remeasurement gains arising from monetary assets and liabilities denominated in currencies other than a business unit's functional currency offset by impairment charges of $1.5 million to reduce our basis in investments to fair value. Based upon our review of our investee's financial condition, results of operations and operating trends and the implied value from recent rounds of financing completed by the investee, we determined that an other-than-temporary impairment existed for two of our investments.

Income Tax Expense

 The effective tax rate for 2003 was significantly more than the U.S. statutory rate which was primarily the result of not reflecting any significant tax benefits for the current net operating losses in certain federal, state and foreign tax jurisdictions. In 2002, income tax expense as a percentage of income before income taxes, minority

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interest and change in accounting method, excluding a $2.3 million increase in our deferred tax valuation allowance, was 39%. The difference between this rate and the statutory U.S. Federal rate of 35% was primarily due to net operating losses in certain European and Asia Pacific subsidiaries for which no tax benefit was recognized and U.S. state and local income taxes offset by lower international tax rates in certain jurisdictions.

2002 Compared to 2001

Revenue

 Revenue increased $45.2 million, or 6.2%, in 2002 compared to 2001. The increases in revenue by geographic region are shown in the following table:

 The increase in North America revenue was mostly due to additional customer care and customer acquisition services we provided to a number of our large global clients and to new work performed by our risk management business. These increases were partially offset by a reduction in technical support services. The weakening of the U.S. dollar versus the British pound and Euro accounted for about $10.6 million, or 70%, of the increase in Europe along with the ramp of new customer programs. The increase in Latin America revenue was due mostly to new work we performed for clients in Mexico and to revenue from our Panama site, as we began serving clients from that facility during the fourth quarter of 2001.

 As a result of certain revisions in the governance of a joint venture, we reported our investment in certain Latin America affiliates using the equity method of accounting, rather than the consolidation method, effective October 1, 2002. As a result of this change, our Latin America revenue will no longer include the revenue associated with the joint venture. Our 2002 revenue was approximately $10 million lower due to the change in accounting.

Direct Labor and Telecommunications Expenses

 Direct labor and telecommunications expenses include the compensation of our customer service professionals and their first line supervisors and telephone usage expenses directly related to the production of revenue.

 Direct labor and telecommunications expenses as a percentage of revenue can vary based on the nature of the contract, the nature of the work, and the market in which the services are provided. Accordingly, direct labor and telecommunications expenses as a percentage of revenue can vary, sometimes significantly, from year to year.

 Direct labor and telecommunications expenses increased $22.4 million, or 5.5%, in 2002 compared to 2001. As a percentage of revenue, direct labor and telecommunications expenses decreased from 56.7% in 2001 to 56.3% in 2002.

 However, as we discuss in the following section, we subcontract certain client services to our India joint venture. We do not incur direct labor and telecommunication expenses for these subcontracted services, as such costs are incurred by the joint venture. Excluding the revenue we have recorded from clients where we have subcontracted the services to our India joint venture, direct labor and telecommunications expenses as a percentage of revenue increased from 56.7% in 2001 compared to 57.5% in 2002, primarily due to lower unit prices from our clients.

Subcontracted and Other Services Expenses

 Subcontracted and other services expenses include services provided to clients through subcontractors and other out-of-pocket expenses. Subcontracted and other services expenses increased $18.1 million, or 48.9%, in 2002 compared to 2001. The increase in these expenses was mostly due to subcontracted expenses of $14.3 million paid to our India joint venture as we began serving clients from that facility during the third quarter of 2001.

Operating, Selling and Administrative Expenses

 Operating, selling and administrative expenses represent expenses incurred to directly support and manage the business, including costs of management, administration, technology, facilities, depreciation and amortization, maintenance, sales and marketing, and client support services.

 Operating, selling and administrative expenses decreased $9.6 million, or 3.7%, in 2002 compared to 2001. Excluding goodwill amortization expense of $3.6 million from the year ended December 31, 2001, operating, selling and administrative expenses decreased $6.0 million, or 2.3%. The decline in these expenses was mostly due to our restructuring plan that began at the end of the third quarter of 2001, partially offset by the ramp up of new customer programs in Europe in the third quarter of 2002. As a percentage of revenue, operating, selling and administrative expenses decreased from 35.4% in 2001, excluding goodwill amortization expense, to 32.6% in 2002.

Asset Impairment and Restructuring Expenses

 During 2002, in connection with the restructuring plan announced in 2001, we recorded additional restructuring

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charges of $1.4 million associated with the write-off of contact center operations and corporate support services identified in 2001.

 In 2001, we announced a restructuring plan designed to intensify our focus on core competencies, accelerate revenue growth, and improve profitability. The key components of the restructuring plan include several major organizational changes and the streamlining of contact center operations and corporate support services to improve effectiveness and drive revenue growth. As part of our restructuring plan, we reduced fixed overhead to improve profitability by substantially completing the following by December 31, 2001:

•

eliminating approximately 350 operating, selling, and administrative positions globally, and

•

reducing excess capacity by closing nine contact centers plus three administrative offices, and downsizing another five contact centers plus two administrative offices, resulting in the elimination of approximately 2,100 workstations.

 In the second quarter of 2001, we recorded $23.8 million of asset impairment and restructuring charges, or $22.1 million net of tax, related to the restructuring plan we announced in June 2001 as described above. In the third quarter of 2001, we recorded $2.4 million of additional charges related to the plan.

Operating Income (Loss)

 We had operating income of $29.3 million in 2002, compared to an operating loss of $9.7 million in 2001. Excluding the asset impairment and restructuring expenses in both years and goodwill amortization expense in 2001, operating income increased $10.7 million from $20.1 million in 2001 to $30.8 million in 2002. As a percentage of revenue, operating income was 4.0% in 2002 compared to 2.8% in 2001. This change resulted from all of the factors affecting revenue and expenses discussed earlier in this section.

Interest Expense, Net

 Interest expense, net of interest income, was slightly lower in 2002 compared to 2001.

Equity in Earnings (Loss) of Affiliates

 Equity in earnings (loss) of affiliates represents our percentage share of the earnings (loss) from our investment in a joint venture in India. As discussed previously, effective October 1, 2002, we revised our joint venture agreement and the results of our operations in certain Latin America affiliates are now being accounted for under the equity method.

 As a result, equity in earnings (loss) of affiliates increased by $3.7 million in 2002 as compared to 2001 primarily due to us beginning to serve clients from the India facility in the third quarter of 2001.

Other Expense, Net

 Other expense, net of other income, decreased $1.7 million in 2002 compared to 2001 mostly because we recorded $1.3 million of losses on disposals of certain assets recognized in 2001.

Income Tax Expense (Benefit)

 We recorded income tax expense of $10.4 million in 2002 compared to an income tax benefit of $2.3 million in 2001.

 The 2002 income tax expense reflects a $2.3 million deferred income tax expense we recorded in the fourth quarter to increase the valuation allowance on deferred tax assets that were recorded in prior years related to an Asia Pacific subsidiary.

 In 2002, income tax expense as a percentage of income before income taxes, minority interest and change in accounting method, excluding the charge in our deferred tax valuation allowance, was 39%. The difference between this rate and the statutory U.S. Federal rate of 35% was primarily due to net operating losses in certain European and Asia Pacific subsidiaries for which no tax benefit was recognized and U.S. state and local income taxes offset by lower international tax rates in certain jurisdictions.

 The 2001 benefit reflects a $6.0 million net deferred income tax benefit we recorded in the first quarter that resulted from an election to treat certain of our foreign operations as branches of our U.S. company for U.S. income tax purposes, and the $2.2 million tax benefit we recorded on the asset impairment and restructuring charges and the losses on disposals of assets in the second quarter. These benefits were offset by a $3.3 million deferred income tax expense we recorded in the second quarter to establish a valuation allowance on deferred tax assets that were recorded in prior years related to our United Kingdom subsidiaries.

Financial Condition and Liquidity

 In this section, we discuss our financial condition and liquidity and the factors affecting them. We separately discuss cash flows, capital resources, and contractual obligations and commitments. We describe our general business risks, critical accounting policies, and estimates that are important to our financial condition and liquidity earlier in this report. Please refer to that discussion as you read this section.

Cash Flows

 The following table sets forth summary cash flow data for the periods indicated. Please refer to this summary as

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you read our discussion of the sources and uses of cash in each year.

2003

 In 2003, cash provided by operating activities resulted primarily from income before asset impairment and restructuring expenses, depreciation and amortization, and other charges of $32.0 million and a $6.5 million increase in other liabilities, which were partially offset by a $30.9 million increase in trade accounts receivable and $1.3 million decrease in trade accounts payable.

 In 2003, we used cash for investing activities mostly to purchase $24.8 million of property and equipment and used $1 million to increase investments in affiliates. This was partially offset by $1.8 million of proceeds from dividends received from an equity method investee.

 In 2003, we received cash from financing activities mostly from $3.7 million of net borrowings under our credit facility and $11.6 million of net borrowings under other local lines of credit. In 2003, we used cash for financing activities to repay $2.3 million of capital lease obligations. In addition, we used cash to purchase a total of $1.0 million of common stock under our existing stock purchase program.

2002

 In 2002, cash provided by operating activities came from income before asset impairment and restructuring expenses, depreciation and amortization, and other charges of $43.9 million and a $2.9 million decrease in trade accounts payable, which were partially offset by a $7.4 million increase in trade accounts receivable and other assets.

 In 2002, we used cash for investing activities mostly to purchase $30.4 million of property and equipment. We received $1.5 million from the sale of property and equipment associated with our joint ventures.

 In 2002, we received cash from financing activities mostly from borrowings under our credit facility.

2001

 In 2001, cash provided by operating activities came from income before asset impairment and restructuring expenses, depreciation and amortization, and other charges of $45.0 million and a $15.3 million decrease in trade accounts receivable, which were partially offset by a $10.2 million decrease in other liabilities. Although accounts receivable decreased during the period, we anticipate accounts receivable will increase as we continue to grow, which may require additional financing.

 In 2001, we used cash for investing activities mostly to purchase $40.4 million of property and equipment, and we invested $2.3 million in a joint venture in India.

 In 2001, we used cash for financing activities mostly to repay $3.8 million of capital lease obligations.

Capital Resources

 We have historically used funds generated from operations, leases of property and equipment, senior subordinated notes, and borrowings under credit facilities with banks to finance business acquisitions, capital expenditures, and working capital requirements.

 We have a three-year $50 million revolving credit facility which expires in December 2005. The credit facility is secured by accounts receivable in the United States, Canada and the United Kingdom. We intend to utilize the facility, as needed, for ongoing working capital requirements and general corporate purposes. At December 31, 2003, we had $41.0 million of available borrowings under the credit facility, and we were in compliance with all financial covenants of the facility.

 We expect to finance our current operations, planned capital expenditures, and internal growth for the foreseeable future using funds generated from operations, existing cash and available funds under our credit facility in addition to lease financing for property and equipment. We estimate that our 2004 capital expenditures will range from $20 million to $40 million to cover technology upgrades, asset replacement and new business initiatives. Future acquisitions, if any, may require additional debt or equity financing.

 Under a stock repurchase program that was authorized by our Board of Directors in February 2001, we may repurchase up to $10 million of our shares from time to time in the open market or in privately negotiated transactions, depending on general business and market conditions. Through the date of this report, we had repurchased a total of 881,700 shares at a total cost of $1.5 million.

Contractual Obligations and Commitments

 We have various contractual obligations and commitments that are described in the Notes to Consolidated Financial Statements. We summarize our

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contractual obligations and commitments at December 31, 2003 in the following table:

Other Matters

Quarterly Results and Seasonality

 We have experienced, and expect to continue to experience, quarterly variations in our results of operations mostly due to:

•

the timing of our clients' customer relationship management initiatives and customer acquisition and loyalty campaigns,

•

the commencement of new contracts and the discontinuance and termination of existing contracts,

•

revenue mix,

•

the timing of additional operating, selling, and administrative expenses to support new business, and

•

the timing of recognition of incentive fees.

 We experience periodic fluctuations in our results of operations related to both the start-up costs associated with expansion and the implementation of clients' CRM activities. In addition, our business generally tends to be slower in the third quarter due to summer holidays in Europe.

Effects of Inflation

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

Accounting Pronouncements

 In June 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standard (SFAS) No. 143, "Accounting for Asset Retirement Obligations" (SFAS 143). SFAS 143 requires that we record the fair value of an asset retirement obligation as a liability in the period in which we incur a legal obligation associated with the retirement of tangible long-lived assets that result from the acquisition, construction, development and/or normal use of assets. We are also required to record a corresponding asset that is depreciated over the life of the asset. Subsequent to the initial measurement of the asset retirement obligation, the obligation will be adjusted at the end of each period to reflect the passage of time and changes in the estimated future cash flows underlying the obligation. We adopted SFAS 143 on January 1, 2003. The adoption of SFAS 143 resulted in a cumulative effect adjustment of $0.1 million of expense and is recorded in other income (expense), net in the consolidated statements of income (loss).

 In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities" (SFAS 146), which is effective for fiscal years beginning after December 31, 2002. SFAS 146 supercedes Emerging Issues Task Force (EITF) Issue No. 94-3, "Liabilities Recognized for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)." We adopted SFAS 146 on January 1, 2003. See Note 11 to the consolidated financial statements for disclosure of asset impairment and restructuring expenses recorded during the first quarter of 2003.

 In November 2002, the EITF reached a consensus on Issue No. 00-21, "Revenue Arrangements with Multiple Deliverables" (EITF 00-21). EITF 00-21 addresses certain aspects of the accounting by a vendor for arrangements under which the vendor will perform multiple revenue generating activities. EITF 00-21 was effective prospectively for new or modified contracts beginning July 1, 2003. The adoption of EITF 00-21 did not have a material impact on our consolidated financial statements.

 In November 2002, the FASB issued Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness to Others, an interpretation of FASB Statements No. 5, 57, and 107 and a rescission of FASB Interpretation No. 34" (FIN 45). FIN 45 elaborates on the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under guarantees issued. FIN 45 also clarifies that a guarantor is required to recognize, at inception of a guarantee, a liability for the fair value of the obligation undertaken. The initial recognition and measurement provisions of FIN 45 are applicable to guarantees issued or modified after December 31, 2002 and have not had a material effect on our consolidated financial statements.

 In January 2003, the FASB released Interpretation No. 46, "Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51" (FIN 46) which requires that all primary beneficiaries of Variable Interest Entities (VIE) consolidate that entity. FIN 46 is effective immediately for VIE's created after January 31, 2003 and to VIE's in which an enterprise obtains an interest after that date. It applies in the first fiscal year or interim period beginning after June 15, 2003 to VIE's in which an enterprise holds a variable interest it acquired before February 1, 2003. In December 2003, the FASB published a revision to FIN 46 ("FIN 46R") to clarify some of the

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provisions of the interpretation and to defer the effective date of implementation for certain entities. Under the guidance of FIN 46R, entities that do not have interests in structures that are commonly referred to as special purpose entities are required to apply the provisions of the interpretation in financials statements for periods ending after March 15, 2004. We do not have interests in special purpose entities and will apply the provisions of FIN 46R with our first quarter 2004 financial statements. We have not completed our assessment of the impact of FIN 46, but do not anticipate a material impact on our consolidated financial statements.

 In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities" (SFAS 149). SFAS 149 amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities under SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" (SFAS 133). Except for the provisions of SFAS 149 that relate to SFAS 133 Implementation Issues that have been effective for fiscal quarters that began prior to June 15, 2003, SFAS 149 is effective for contracts entered into or modified after June 30, 2003 and for hedging relationships designated after June 30, 2003. The application of SFAS 149 did not have a material effect on our consolidated financial statements.

 In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity" (SFAS 150). The provisions of SFAS 150, which also include a number of new disclosure requirements, are effective for instruments entered into or modified after May 31, 2003 and for pre-existing instruments as of July 1, 2003. The adoption of SFAS 150 did not have a material effect on our consolidated financial statements.

 In May 2003, the EITF reached a consensus on Issue 01-8, Determining Whether an Arrangement Contains a Lease ("EITF 01-8"). Under the provisions of EITF 01-8, arrangements conveying the right to control the use of specific property, plant or equipment must be evaluated to determine whether they contain a lease. The new rules will be applied prospectively to such contracts entered into or modified after July 1, 2003. The adoption of EITF 01-8 did not have a material impact on our consolidated financial statements.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Foreign Currency Risk

 We are exposed to market risks associated primarily with changes in foreign currency exchange rates. We have operations in many parts of the world; however, both revenue and expenses of those operations are typically denominated in the currency of the country of operations, providing a natural hedge.

 Our financial statements are presented in U.S. dollars and can be impacted by foreign exchange fluctuations through both (i) translation risk, which is the risk that the financial statements for a particular period or as of a certain date depend on the prevailing exchange rates of the various currencies against the U.S. dollar, and (ii) transaction risk, which is the risk that the functional currency of costs and liabilities fluctuates in relation to the currency of our revenue and assets, which fluctuation may adversely affect operating margins.

 With respect to translation risk, even though the fluctuations of currencies against the U.S. dollar can be substantial and therefore significantly impact comparisons with prior periods, the translation impact is recorded as a component of stockholders' equity and does not affect the underlying results of operations. Gains and losses related to transactions denominated in a currency other than the functional currency of the countries in which we operate including short-term intercompany accounts are included in the determination of net income (loss).

Interest Rate Risk

 We are also exposed to changes in interest rates on our variable rate borrowings. Interest rates on our Senior Subordinated Notes and capital lease obligations are fixed, but rates on borrowings under our bank credit facility are variable. During the years ended December 31, 2003, 2002 and 2001, our average borrowings under our bank credit facility were $5.2 million, $2.1 million, and $10.7 million, respectively. Based on our projected cash needs for the foreseeable future, we do not expect that our exposure to changes in interest rates for these borrowings will have a material impact on our interest expense.

Item 8. Financial Statements and Supplementary Data

 The information called for by this item is incorporated by reference from our Consolidated Financial Statements beginning on page F-3 and the related Notes to Consolidated Financial Statements beginning on page F-7.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

 None.

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Item 9A. Controls and Procedures

 Our management evaluated, with the participation of our Chief Executive Officer and our Chief Financial Officer, the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-K. Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures are effective to ensure that information we are required to disclose in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

 There was no change in our internal control over financial reporting that occurred during the fourth fiscal quarter of the fiscal year covered by this Annual Report on Form 10-K that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART III

Item 10. Directors and Executive Officers of the Registrant

 The information required by this item with respect to directors is set forth in the Proxy Statement under the captions "Proposal: Board of Directors and Election" and "Section 16(a) Beneficial Ownership Reporting Compliance," and is incorporated herein by reference.

 The information required by this item with respect to executive officers of SITEL Corporation, pursuant to instruction 3 of paragraph (b) of Item 401 of Regulation S-K, is set forth following Item 4 of Part I of this Form 10-K under the caption "Executive Officers of the Registrant" and in the Proxy Statement under the caption "Section 16(a) Beneficial Ownership Reporting Compliance," and is incorporated herein by reference.

Audit Committee and Audit Committee Financial Expert

 The Company has established a separate Audit Committee of the Board of Directors, comprised of directors Desai, DeVito, Gourlay, Hanger and Kubat. The Company's Board of Directors has determined that Mr. Kubat qualifies as an audit committee financial expert and is independent.

Code of Ethics

 The Company has adopted a code of ethics that applies to its chief executive officer, chief financial officer and controller. The code of ethics is filed as Exhibit 14 to this Annual Report on Form 10-K and may also be accessed through the Investors section of our Internet website listed under Item 1 of this Annual Report on Form 10-K under the caption "Available Information" (beginning no later than our 2004 annual stockholders meeting).

Item 11. Executive Compensation

 The information required by this item is set forth in the Proxy Statement under the captions "Annual Compensation," "Arrangements with Executive Officers," "Benefit Plans," "Option Grants and Holdings," "Compensation Committee Report on Executive Compensation," and "Performance Graph," and is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 The information required by this item regarding security ownership of certain beneficial owners and management is set forth in the Proxy Statement under the caption "Common Stock Owned by Certain Beneficial Owners and by Executive Officers and Directors," and is incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions

 The information required by this item is set forth in the Proxy Statement under the caption "Compensation Committee Interlocks and Insider Participation; Certain Transactions," and is incorporated herein by reference.

Item 14. Principal Accountant Fees and Services

 The information required by this item is set forth in the Proxy Statement under the caption "Independent Public Accountants" and is incorporated herein by reference.

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PART IV

Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a)

The following documents are filed as a part of this report:

1.

Financial Statements – beginning on page F-1 of this report.

•

Independent Auditors' Report

•

Consolidated Statements of Income (Loss) For The Years Ended December 31, 2003, 2002, and 2001

•

Consolidated Balance Sheets at December 31, 2003 and 2002

•

Consolidated Statements of Stockholders' Equity For The Years Ended December 31, 2003, 2002, and 2001

•

Consolidated Statements of Cash Flows For The Years Ended December 31, 2003, 2002, and 2001

•

Notes to Consolidated Financial Statements

2.

Financial Statement Schedule – beginning on page S-1 of this report.

•

Independent Auditors' Report on the Financial Statement Schedule

•

Schedule II – Valuation and Qualifying Accounts

Schedules other than Schedule II are omitted as not applicable or not required.

3.

Exhibits – required by Item 601 of Regulation S-K:

All exhibits as set forth on the Exhibit Index, which is incorporated herein by reference.

(b)

Reports on Form 8-K:

The Company filed a Current Report on Form 8-K dated October 29, 2003, which reported under Items 7 and 12 the issuance of a press release. The press release was filed as an exhibit to the Form 8-K.

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SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

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EXHIBIT INDEX

24

* Filed herewith.

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SITEL CORPORATION AND SUBSDIRIES


TABLE OF CONTENTS
Financial Statements and Financial Statement Schedule

F-1

Independent Auditors' Report

To the Stockholders and Board of Directors
of SITEL Corporation

 We have audited the accompanying consolidated balance sheets of SITEL Corporation and subsidiaries as of December 31, 2003 and 2002, and the related consolidated statements of income (loss), stockholders' equity and cash flows for each of the years in the three-year period ended December 31, 2003. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

 We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of SITEL Corporation and subsidiaries as of December 31, 2003 and 2002, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2003, in conformity with accounting principles generally accepted in the United States of America.

 As discussed in Note 1 to the consolidated financial statements, the Company adopted the provisions of SFAS No. 142, Goodwill and Other Intangible Assets, as of January 1, 2002.

F-2

SITEL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS)