This discussion contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements are based upon current expectations that involve risks and uncertainties. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. For example, the words "believes," "anticipates," "plans," "expects," "intends" and similar expressions that convey uncertainty of future events or outcomes are forward-looking statements. Forward-looking statements include statements regarding our anticipated financial and operating performance for future periods. Our actual results could differ materially from those discussed or suggested in the forward-looking statements herein. Factors that could cause or contribute to such differences or prove our forward-looking statements, by hindsight, to be overly optimistic or unachievable include, but are not limited to, the following:

· actual demand for our services;

· our ability to attract, train, and retain qualified staffing consultants;

· our ability to remain competitive in obtaining and retaining temporary staffing clients;

· the availability of qualified temporary nurses and other qualified contract professionals;

· our ability to manage our growth efficiently and effectively; and

· continued performance of our information systems.

For a discussion of these and other factors that may impact our realization of our forward-looking statements, see "Business-Risk Factors" within Item 1A of Part I of this Annual Report on Form 10-K. Other factors may also contribute to the differences between our forward-looking statements and our actual results. In addition, as a result of these and other factors, our past financial performance should not be relied on as an indication of future performance. All forward-looking statements in this document are based on information available to us as of the date we file this Annual Report on Form 10-K, and we assume no obligation to update any forward-looking statement or the reasons why our actual results may differ.

On Assignment, Inc. is a diversified professional staffing firm providing flexible and permanent staffing solutions in specialty skills including Laboratory/Scientific, Healthcare/Nursing, Physicians, Medical Financial, Information Technology and Engineering. We provide clients in these markets with short-term or long-term assignments of contract professionals, contract-to-permanent placement and direct placement of these professionals. Our business currently consists of four operating segments: Life Sciences, Healthcare, Physician, and IT and Engineering.

Consolidated revenues increased 9.0 percent to $618.1 million in 2008 from $567.2 million in the previous year. Consolidated gross margin improved 62 basis points to 32.3 percent from 31.7 percent in 2007 and gross profit increased 11.1 percent to $199.5 million from $179.5 million in 2007.

Despite the weakening of the U.S. economy in the latter end of 2008, we were able to grow our revenues and expand our gross margin in 2008. However, key indicators of demand have weakened (i.e. permanent placement and conversion revenues, number of new assignments and/or terminations, bill/pay spread, amount of time it takes customers to make a hiring decision on a qualified candidate and the number of billable hours per contract professional). We do not expect to see a dramatic improvement in demand for our services in 2009. However, we do believe our continued focus on items that are within our control (i.e., certain factors impacting gross margins, selling, general and administrative (SG&A) expense management and cash generation) has us well positioned to confront the current economic environment. We remain cautious going into 2009 given the seasonality of our business, as discussed below, as well as the challenging economic environment in which we are currently operating. Our Healthcare, Physician and IT and Engineering segments experienced increased demand in 2008, yet demand weakened in the fourth quarter for our Healthcare and IT and Engineering segments. The demand for services in our Life Sciences segment, which is perhaps most related to the general economic conditions, weakened in 2008.

The initiatives undertaken during the last several years have been key to the growth in revenues and profitability experienced in 2008. In January of 2007, we acquired VISTA Staffing Solutions, Inc. (VISTA), a privately-owned leading provider of physician staffing, known as locum tenens, and permanent physician search services and Oxford Global Resources, Inc. (Oxford), a leading provider of high-end information technology and engineering staffing services. In 2008, we focused on assisting the newly acquired Physician and IT and Engineering segments to continue to perform while integrating with and operating as a part of On Assignment.

During the past three years, we focused on diversifying our client mix in the Healthcare segment through the expansion of our client base. We made significant progress in

further strengthening the sales force through the hiring of seasoned professionals with staffing industry experience and committing more resources to our newer services lines, local nursing, health information management, clinical research and our two new acquired segments: Physician and IT and Engineering.

Demand for our staffing services historically has been lower during the first and fourth quarters due to fewer business days resulting from client shutdowns, adverse weather conditions and a decline in the number of contract professionals willing to work during the holidays. As is common in the staffing industry, we run special incentive programs to keep our contract professionals, particularly nurses, working through the holidays. Demand for our staffing services usually increases in the second and third quarters of the year. In addition, our cost of services typically increases in the first quarter primarily due to the reset of payroll taxes.

Results of Operations

The following table summarizes, for the periods indicated, selected income statement data expressed as a percentage of revenues:

                                                   Year Ended December 31,
                                                 2008        2007        2006
Revenues                                          100.0 %     100.0 %     100.0 %
Cost of services                                   67.7        68.3        72.9
Gross profit                                       32.3        31.7        27.1
Selling, general and administrative expenses       25.2        26.8        23.6
Operating income                                    7.1         4.7         3.5
Interest expense                                   (1.6 )      (1.9 )       0.0
Interest income                                     0.1         0.2         0.5
Income before income taxes                          5.6         3.0         4.0
Provision for income taxes                          2.5         1.4         0.2
Net income                                          3.1 %       1.6 %       3.8 %

     CHANGES IN RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2008


                COMPARED WITH THE YEAR ENDED DECEMBER 31, 2007



Revenues.

                                        Year Ended December 31,               Change
                                          2008             2007               $          %
Revenues by segment (in thousands):
 Life Sciences                        $    129,483       $ 134,622     $  (5,139 )     (3.8 %)
 Healthcare                                180,671         175,079         5,592        3.2 %
 Physician                                  89,217          74,599        14,618       19.6 %
 IT and Engineering                        218,687         182,880        35,807       19.6 %
Total Revenues                        $    618,058       $ 567,180     $  50,878        9.0 %

Revenues increased $50.9 million, or 9.0 percent as a result of growth in our Healthcare, Physician, IT and Engineering segments. The growth was due to both demand in our end markets, as well as an expanded and more experienced sales and fulfillment team. In the latter half of 2007, we made management changes and realigned certain geographic markets in our Healthcare segment in order to generate higher revenue growth. The 2008 period included twelve months of activity from the IT and Engineering segment, as opposed to only eleven months in the 2007 period.

Life Sciences segment revenues decreased $5.1 million, or 3.8 percent. The decrease in revenues was primarily attributable to a 9.8 percent decrease in the average number of contract professionals on assignment, a $0.6 million, or 28.3 percent, decrease in conversion fee revenues and the deteriorating foreign exchange rate for the British Pound and the Euro combined with a deepening recession in the United Kingdom and the United States. These decreases were partially offset by a 5.4 percent increase in the average bill rate and a $0.2 million increase in permanent placement fees. The year-over-year decrease in revenues is a direct result of our clients' decisions to focus more

on cost containment than on completing projects, developing new products or enhancing existing product lines during this challenging economic period.

The overall increase in Healthcare segment revenues, which include our Nurse Travel and Allied Healthcare lines of business, consisted of an increase in both the Nurse Travel and Allied Healthcare lines of business revenues. Nurse Travel revenues increased $5.3 million, or 4.4 percent, to $125.1 million. The increase in revenues was primarily attributable to a 4.0 percent increase in the average number of nurses on assignment, as well as a 2.9 percent increase in the average bill rate. The Nurse Travel revenues in 2008 also included $2.4 million related to supporting a long standing customer that experienced a labor disruption. The Nurse Travel results include a decrease in revenues derived from hospitals that experienced labor disruptions, which for the year ended December 31, 2007 were $2.8 million. Allied Healthcare revenues increased $0.3 million, or 0.6 percent due to a 4.8 percent increase in the average bill rate and an increase in billable expenses, partially offset by a 6.7 percent decrease in the average number of contract professionals on assignment. In addition, direct hire revenues in the Allied Healthcare line of business decreased $0.2 million, or 13.5 percent.

Physician segment revenues increased $14.6 million, or 19.6 percent. The increase in revenues in 2008 was primarily due to an 11.2 percent increase in the average number of contract professionals on assignment as well as a 7.3 percent increase in the average bill rate as a result of a strong demand environment as a result of a growing shortage of physicians.

The IT and Engineering segment revenues increased $35.8 million, or 19.6 percent. The increase in revenue was primarily due to a 7.3 percent increase in the average number of contract professionals on assignment, a 3.5 percent increase in the average bill rate as well as an increase in conversion and direct hire fee revenue and billable expenses. In addition, revenues for 2007 only included eleven months of results because the Company completed its acquisition of Oxford on January 31, 2007.

Gross Profit and Gross Margins.

                                                                   Year Ended December 31,
                                                         2008                                  2007
                                            Gross Profit       Gross Margin       Gross Profit       Gross Margin
Gross Profit by segment (in thousands):
 Life Sciences                             $       43,502               33.6 %   $       45,024               33.4 %
 Healthcare                                        46,265               25.6 %           44,269               25.3 %
 Physician                                         27,369               30.7 %           21,808               29.2 %
 IT and Engineering                                82,320               37.6 %           68,436               37.4 %
Total Gross Profit                         $      199,456               32.3 %   $      179,537               31.7 %

The year-over-year gross profit increase was due to growth in revenues in the IT and Engineering, Physician and Healthcare segments and a 62 basis point expansion in consolidated gross margin. The expansion in gross margin was primarily attributable to increases in margins in the Physician and Healthcare segments and to a higher proportion of revenues from the IT and Engineering segment, which has higher gross margins than the other segments. The 2008 period included twelve months of reportable activity from the IT and Engineering segment as compared with only eleven months in the 2007 period.

Life Sciences segment gross profit decreased $1.5 million, or 3.4 percent. The decrease in gross profit was primarily due to a 3.8 percent decrease in the segment revenues partially offset by an increase of 16 basis points in gross margin. The increase in gross margin was predominantly due to a 7.1 percent increase in bill/pay spread as a result of our continued focus on pricing policies and increased direct hire revenues.

Healthcare segment gross profit increased $2.0 million, or 4.5 percent. The increase in gross profit was due to a 3.2 percent increase in the segment revenues and an increase in gross margin. Gross margin for the segment increased 32 basis points due to an increase in the bill/pay spread, partially offset by an increase in other contract employee expenses. This segment includes gross profit from the Nurse Travel and Allied Healthcare lines of business. Allied Healthcare gross profit increased 0.7 percent and gross margin increased 2 basis points while Nurse Travel gross profit increased 7.0 percent and gross margin increased 57 basis points. Gross margins in the first quarter of a year tend to be lower than the fourth quarter of the preceding year due to the reset of certain payroll taxes.

Physician segment gross profit increased $5.6 million, or 25.5 percent. The increase in gross profit was primarily attributable to a 19.6 percent increase in revenues as well as an increase in gross margin. Gross margin for the segment increased 145 basis points primarily due to an increase in bill/pay spread, partially offset by increased medical malpractice expense. The segment began adjusting bill rates simultaneously with adjustments in the pay

rates when possible which positively impacted the bill/pay spread in 2008.

IT and Engineering segment gross profit increased $13.9 million, or 20.3 percent, primarily due to a 19.6 percent increase in revenues, as the 2008 period included twelve months of reportable activity versus eleven months in 2007, as well as an increase in gross margin for the segment. Gross margin for the segment increased 22 basis points, primarily due to an increase in bill/pay spread and a $0.8 million, or 83.7 percent increase in conversion fee revenue, partially offset by a $3.2 million, or 31.0 percent increase in other contract employment expenses. As with our other divisions, to the extent we employ contract professionals, we may see lower gross margins in the first quarter of 2009 due to the reset of certain payroll taxes.

Selling, General and Administrative Expenses. SG&A expenses include field operating expenses, such as costs associated with our network of staffing consultants and branch offices for our Life Sciences segment and our Allied Healthcare lines of business, including staffing consultant compensation, rent and other office expenses, as well as marketing and recruiting for our contract professionals. Nurse Travel SG&A expenses include compensation for regional sales directors, account managers and recruiters, as well as rent and other office expenses and marketing for traveling nurses. SG&A expenses from our Physician and IT and Engineering segments include compensation for sales personnel, as well as rent and other office expenses and marketing for these segments. SG&A expenses also include our corporate and branch office support expenses, such as the salaries of corporate operations and support personnel, recruiting and training expenses for field staff, marketing staff expenses, rent, expenses related to being a publicly-traded company and other general and administrative expenses.

SG&A expenses increased $4.0 million, or 2.6 percent, to $155.9 million from $151.9 million. The increase in SG&A was primarily due to a $10.2 million increase in compensation and benefits as a result of increased revenues, and SG&A expenses of the IT and Engineering segment being included for twelve months in 2008 compared to only eleven months in 2007. The increase in SG&A expense was partially offset by a $7.0 million decrease in depreciation and amortization expenses, primarily related to a reduction of the amortization amount for other intangibles in 2008. Total SG&A as a percentage of revenues decreased to 25.2 percent in the 2008 period from 26.8 percent in the 2007 period, primarily due to decreased depreciation and amortization expense. Going forward, we will continue to manage our SG&A closely and do not expect any significant changes.

Interest expense and interest income. Interest expense was $10.0 million and $12.2 million for the years ended December 31, 2008 and 2007, respectively. The decrease in interest expense was primarily due to lower average debt balances in 2008 due to $9.7 million principal payments in 2007, and a decrease in average interest rates during 2008. On December 31, 2008 and 2007, the value of our interest rate swap was marked-to-market, and we recorded a loss of $0.1 million and $1.2 million, respectively, for the years then ended, which is shown in interest expense, and the related liability of $1.3 million and $1.2 million, respectively, is included in the Consolidated Balance Sheets in other current liabilities.

Interest income was $0.7 million and $1.4 million for the years ended December 31, 2008 and 2007, respectively. Interest income in the current period was also lower due to lower average interest rates in 2008.

Provision for Income Taxes. The provision for income taxes was $15.3 million for the year ended December 31, 2008 compared to $7.5 million for the same period in the prior year. The annual effective tax rate was 44.6 percent for 2008 and 2007.

     CHANGES IN RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2007


                COMPARED WITH THE YEAR ENDED DECEMBER 31, 2006




Revenues.
                                                Year Ended December 31,                Change
                                                  2007             2006               $             %
Revenues by segment (in thousands):
 Life Sciences                                $    134,622       $ 117,462     $  17,160          14.6 %
 Healthcare                                        175,079         170,104         4,975           2.9 %
 Physician (from January 3, 2007)                   74,599               ?        74,599           N/A
 IT and Engineering (from January 31, 2007)        182,880               ?       182,880           N/A
Total Revenues                                $    567,180       $ 287,566     $ 279,614          97.2 %

Consolidated year-over-year revenue growth was primarily attributable to the acquisitions of VISTA and Oxford, completed on January 3, 2007 and January 31, 2007, respectively, and included revenues from their respective date of acquisition. We also experienced organic growth in our Life Sciences and Healthcare segments. These organic results were due to both demand in our end markets as well as an expanded and more experienced sales and fulfillment team. Our Healthcare segment revenues began to slow in the latter half of the year, driven by slower than expected progress in replacing a large account that closed its acute care facility following its failure to gain government certification, our reduction in placements at another large customer due to pricing, as well as a generally lackluster Nurse Travel end market. We made management changes and realigned certain geographic markets to facilitate generating a better growth rate in the segment on a go-forward basis. We continued to focus on the growth of our established product lines as well as our newer product lines, including Health Information Management, Clinical Research, Engineering, Local Nursing, Physician, IT and Engineering, and further development of our direct hire business.

Revenues increased $279.6 million or 97.2 percent, from $287.6 million to $567.2 million. This increase was due in great part because of the acquisitions of VISTA and Oxford, which accounted for $257.5 million of the increase. In addition, conversion and direct hire fee revenues increased $4.9 million, or 75.2 percent, from $6.6 million, or 2.3 percent of revenue to $11.5 million, or 2.0 percent of revenue. This was a result of more contract professionals being converted into or hired directly as permanent employees in our legacy businesses, accounting for $2.0 million of the increase, as well as from conversion and direct hire fee revenues generated in the newly acquired Physician and IT and Engineering segments, which accounted for $3.0 million of the increase. Continued development of the direct hire business had a favorable impact on our operating results and remained a focus of management.

Life Sciences segment revenues increased $17.2 million, or 14.6 percent, from $117.5 million to $134.6 million. The increase in revenues was primarily attributable to a 7.6 percent increase in average bill rates, or approximately $9.0 million, as well as a 5.0 percent increase in the average number of contract professionals on assignment, or approximately $5.9 million. In addition, conversion and direct hire fee revenues increased $1.2 million, or 22.3 percent, from $5.5 million to $6.7 million. Our newer service line offerings, Clinical Research and Engineering, continued to grow by generating a larger number of higher-level, higher-revenue placements during 2007 than 2006, with a 17.7 percent increase in contract professionals placed in 2007 than in 2006.

The overall increase in Healthcare segment revenues, which included our Nurse Travel and Allied Healthcare lines of business, resulted from an increase in revenues generated by the Allied Healthcare line of business while the Nurse Travel line remained relatively flat for the period. Healthcare segment revenues increased $5.0 million, or 2.9 percent, from $170.1 million to $175.1 million. Allied Healthcare revenues increased $4.7 million, or 9.4 percent, from $50.5 million to $55.2 million. The increase in revenues was primarily attributable to a 13.0 percent increase in the average number of contract professionals on assignment, or approximately $6.5 million, as well as a 67.6 percent increase in conversion and direct hire fee revenues from $1.1 million to $1.9 million. The increase was offset by a 6.6 percent decrease in hours worked per contract professional, or approximately $5.0 million. Nurse Travel revenues increased $0.2 million, or 0.2 percent, from $119.6 million to $119.8 million. The slight increase in Nurse Travel revenues was due to a 1.0 percent increase in the average bill rate, offset by a 2.6 percent decrease in average hours worked per nurse and a 0.4 percent decrease in average contract professionals on assignment.

Physician segment revenues, which consisted of the recently acquired VISTA, were $74.6 million for the year ended December 31, 2007. Physician segment revenue was 13.2 percent of total revenue for the year ended December 31, 2007. The Physician segment had fourth quarter 2007 revenues of $19.4 million, an increase of 14.6 percent over the pro-forma fourth quarter revenue of 2006.

IT and Engineering segment revenues, which consisted of the recently acquired Oxford, were $182.9 million for the year ended December 31, 2007. IT and Engineering segment revenue was 32.2 percent of total revenue for the year ended December 31, 2007. The IT and Engineering segment revenues for the fourth quarter of 2007 were $53.3 million, an increase of 16.1 percent over the pro-forma fourth quarter of 2006.

   Gross Profit and Gross Margins.

                                                                      Year Ended December 31,
                                                            2007                                2006
                                               Gross Profit       Gross Margin       Gross Profit       Gross Margin
Gross Profit by segment (in thousands):
 Life Sciences                                $       45,024               33.4 %   $       38,143           32.5 %
 Healthcare                                           44,269               25.3 %           39,698           23.3 %
 Physician (from January 3, 2007)                     21,808               29.2 %                ?            N/A
 IT and Engineering (from January 31, 2007)           68,436               37.4 %                ?            N/A
Total Gross Profit                            $      179,537               31.7 %   $       77,841           27.1 %

Gross profit increased $101.7 million from $77.8 million to $179.5 million. Gross margins increased 460 basis points from 27.1 percent to 31.7 percent. On a consolidated basis, gross profit and gross margins increased significantly due the acquisitions of VISTA and Oxford completed on January 3, 2007 and January 31, 2007, respectively, and included gross profit from their respective date of acquisition. The 460 basis point increase in consolidated gross margin year over year was largely attributable to the 37.4 percent gross margin earned in the IT and Engineering segment, which consists entirely of the Oxford acquisition. Additionally, we experienced margin improvement in both of our historical segments, Life Sciences and Healthcare.

Life Sciences segment gross profit increased due to an increase in revenues and improved gross margin. Gross margins for the segment increased 90 basis points from 32.5 percent to 33.4 percent. The Life Sciences segment gross margin increase was primarily related to lower workers' compensation expense, an increased bill/pay spread and increased direct hire and conversion fee revenues. Direct hire and conversion fee revenues increased $1.2 million, or 22.3 percent, from $5.5 million to $6.7 million. Increases in direct hire and conversion fee revenues had a positive impact on gross margin as there are no associated costs of services. Gross margins in the first quarter of a year tend to be lower than the fourth quarter of the preceding year due to the reset of certain payroll taxes.

Healthcare segment gross profit increased due to an increase in revenues and improved gross margin. This segment includes gross profit from the Nurse Travel and Allied Healthcare lines of business. Gross margin for the segment increased 200 basis points from 23.3 percent to 25.3 percent. The increase was primarily related to an increase in the bill/pay spread, reduced housing and travel costs, lower workers' compensation expense and increased direct hire and conversion fee revenues, partially offset by an increase in temporary employee per diem expense. Direct hire and conversion fee revenues in the Allied Healthcare line of business increased $0.7 million, or 67.6 percent, from $1.1 million to $1.9 million. Gross margins in the first quarter of a year tend to be lower than the fourth quarter of the preceding year due to the reset of certain payroll taxes.

. . .