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LETTER RE 8-K FILED MAY 9, 2005 (File No. 0-14314)

 July 14, 2005

 Securities Exchange Commission

Telephone Number:

202-551-3466

 Division of Corporate Finance

Facsimile Number:

202-772-9209

 Mail Stop 4561

 450 Fifth Street, N.W.

 Washington, D.C. 20549

RE:
Aegis Communications Group, Inc.

 Form 8-K

 Filed May 9, 2005

 File No. 0-14315

 Ladies and
Gentlemen:

 On behalf of our Company, Aegis Communications Group, Inc. (the
“Company”), attached in electronic format for filing with the Securities and Exchange Commission (the “SEC”), reproduced below are the comments of the Staff of the SEC to the Company as set forth in its letter of comments, dated
May 24, 2005, from Matthew Maulbeck, Staff Accountant, (the “Comment Letter”), and the Company’s response to each comment. The Company prepared all responses to the comments contained in the Staff’s letter, and has discussed its
responses with BDO Seidman, LLP, the Company’s former independent auditor (“BDO”).

 The Company acknowledges that it is responsible for the accuracy and adequacy of disclosures made previously or in the course of replying to SEC staff comments, and that SEC staff comments or changes in response to
SEC staff comments in the Company’s disclosure filings do not foreclose the SEC from taking action with respect to any filing. The Company acknowledges that it may not assert SEC staff comments as a defense in any proceeding initiated by the
SEC or any person under the federal securities laws of the United States.

1.
COMMENT:

 Supplementally provide a detailed description of the accounting errors identified by your former auditors relating to the lack of adequate accounting staff, the revenue recognition process, and the timely closing of
the books, and the amounts involved. Also, tell us in what period these reportable events occurred and whether or not you intend to restate any prior period for any adjustment resulting from the reportable event; and if not, why not.

 RESPONSE:

 To begin, we have interpreted your references to “accounting
errors” in your Comment Letter to mean the “material weaknesses” in our internal controls

over financial reporting first disclosed in our Annual Report on Form 10-K for the year ended December 31, 2004 (the “2004 10-K”) and later
referenced in our Current Report on Form 8-K filed May 9, 2005. To recap, those identified “material weaknesses” related to (1) lack of adequate accounting staff; (2) revenue recognition process; and (3) timely closing of the books. Those
“material weaknesses” were identified by BDO in connection with the Company’s audit for the fiscal year ended December 31, 2004, and the Company does not currently intend to restate any prior period as a result of the identified
“material weaknesses.” Against this background, let us address each of the identified “material weaknesses”:

•

 LACK OF ADEQUATE ACCOUNTING STAFF: The Company has 39 adjusting entries of various adjusting estimates of accruals, reclassification of amounts between accounts
and other accounting entries as a result of the turnover throughout the Finance Department during the 3rd and the
4th quarters of 2004, including the departure of the Chief Financial Officer on September 30, 2004 and the departure
of the Controller on August 26, 2004. This was exacerbated by the departure of the General Ledger Accounting Manager and the Senior Accountant in the General Ledger Department at the end of January 2005. Before departing, the former accounting staff
substantially closed the books for December 2004 and completed the initial set of year-end audit schedules for BDO. Those former accounting staff members performed analysis and reconciliations before departing but they were not available to provide
any history on adjusting journal entries and recording of any reconciling issues. BDO began its audit and identified most of the adjustments and matters for possible adjustments for review by the Company’s management. The Company then carefully
re-reviewed its accounting data, and subsequently proposed a total of 39 adjusting entries to the Company’s Audit Committee and to BDO, each of which were subsequently recorded for in 2004. Those adjusting entries were of various natures,
having a net effect of reducing the net deficit of retained earnings (see Response to Comment No. 3 below). In light of the accounting and finance staff turnover during 2004, the Company’s management spent considerable time providing due
diligence in reviewing and re-reviewing the close process, reserves, accruals and books of records, reducing its internal threshold for the review to a per-ticket size of $20,000 on adjusting entries. The objective of this extensive effort by the
Company’s management was to ensure that the Company would surface and provide resolution to the identified entries. As disclosed in the Company’s 10-K for the year ended 2004 and reiterated in the Company’s 10-Q for the quarter ended
March 31, 2005, the Company was aware of its staffing needs and has taken steps to address its understaffed Finance and Accounting team. In this regard, on December 28, 2004, the Company brought on a new Vice President-Finance, who is a Certified
Public Accountant with extensive CFO-level and SEC public company reporting experience. Additionally, the Company hired a new Accounting Manager who is a CPA with SEC reporting experience on

February 16, 2005, and then a Staff Accountant currently working to complete the Uniform CPA Exam on May 9, 2005. Moreover, on January 1, 2005, the
Company engaged a CPA providing Sarbanes-Oxley Section 404 (SOX) consulting services.

•

REVENUE RECOGNITION PROCESS: BDO identified that the Company relies on manual calculations and interventions in its revenue recognition process. The amount and degree of manual
calculations are problematic because there could potentially exist an error that could remain undetected in the manual calculations and interventions process. However, the Company is not aware of any errors in its accounting records. Based on its
belief that there are no accounting errors or reportable events resulting from its manual calculations and interventions in its revenue recognition process, the Company does not intend to restate its financial statements for any prior period. As
stated in the Company’s 2004 10-K, the Company is preparing model-billing templates based on two general methods through which we record revenue for services. The Company also has instituted review of all customer contract files reviewing for
completeness, and in a new procedure, the Company’s account receivables specialist prepares a schedule comparing actual monthly billings by customer to the revenue estimate derived in weekly operating performance meetings, which is reviewed and
approved by the Vice President-Finance.

•

TIMELY CLOSING OF THE BOOKS: In the course of the audit, BDO noted that the Company’s closing of the books for January and February 2005 was untimely, as well as the late
closing and filing of the Company’s 3rd Quarter 2004 10-Q Financial Statements. The Company attributes those untimely
closings to, in part the arrival in September 2004 of Richard Ferry as President and Chief Executive Officer and Kannan Ramasamy as Chief Operating Officer and Secretary, who used additional time to get up to speed on the Company’s financials
through the additional services of an additional review by an outside accounting firm during the 3rd Quarter 2004
and, in part, due to the nearly one hundred percent turnover of the Company’s accounting staff during late 2004 and early 2005. The Company is not aware of any errors in its accounting records as a result of its untimely closing of the books.
Based on its belief that there were no errors or reportable events resulting from its untimely closing of the books and nothing has surfaced in subsequent closings or reasons of errors in those closings, the Company does not currently intend to
restate its financial statements for any prior periods. As described above, the Company was aware of its staffing needs and has taken steps to address its understaffed Finance and Accounting team.

2.
COMMENT:

 Provide us with any letter or written communication to and from the former accountants regarding any disagreements or reportable events to management or the Audit Committee.

 RESPONSE:

 Per your request, refer to the following attached communications:

•

March 23, 2005 and April 14, 2005 letter to Audit Committee Meeting of Aegis Communications Group

•

Audit Adjusting Journal Entries as of December 31, 2004 prepared by the Management of the Company

•

BDO Seidman Management Letter addressed to the Audit Committee, Aegis Communications Group, Inc., dated April 14, 2005

•

Aegis Communications Group Management Representation Letter to BDO Seidman relating to the 10-K Filing, dated April 14, 2005

•

BDO Seidman SAS 61 Letter addressed to the Audit Committee, Aegis Communications Group, Inc., dated April 14, 2005

3.
COMMENT:

 Please provide us with a schedule of your year end adjustments to close the books or adjustments recorded in connection with or as a result of the audit for the year ended December 31, 2004. Clearly explain the reason
for each adjustment. For each adjustment, show us the impact on pre-tax net loss. Quantify the net effect of all adjustments on pre-tax net income (loss). Also, tell us why none of the adjustments relate to prior period. Explain in detail why you
believe the timing of each adjustment is appropriate.

 RESPONSE:

 Per your request, please refer
to the attached worksheet Aegis Communications Group Proposed Adjusting Journal Entries for Year-Ended December 31, 2004 with detailed reason for each adjustment showing impact on pre-tax loss and net loss, and quantified for all adjustments. As
shown in the attachment, the impact of these adjustments on any quarter other than the 4th quarter 2004 was immaterial, and
the Company’s Management and the Company’s Audit Committee therefore believed (and continues to believe) that no restatement of any periods prior to the 4th quarter 2004 was (or is) required.

 We have continued to invest in the financial and controls process and improved the timely closing of our monthly accounts
and placed cross functional teams including business operations to address the issues brought up during the 2004 audit by BDO and our internal Sarbanes-Oxley implementation process.

 Please do not hesitate to contact me if I can be of further assistance.

 Very truly yours,

 /s/ Kannan Ramasamy

 Kannan Ramasamy

 President and Chief Executive Officer

 Aegis Communications Group

 Analysis of Journal Entries

 December 31, 2004 10-K Report

 Following five entries are

 entries that could be covered

 outside of the 4th Quarter

2004.

(Dollars in Thousands)

2003
10-K

2004
1qtr

2004
2qtr

2004
3qtr

2004
4qtr

Total
Adjustment

 Debits - (Credits)

 Difference on JE # 19

—

—

(32
)

(85
)

(28
)

(145)

 Workers Compensation

While closing the books the Company accrued $223,869 for Workers Compensation insurance. After closing of books, the Company received an invoice from the West Virginia Workers
Compensation Commission amounting to only $79,256 for the 4th Quarter 2004. Therefore Management proposed an adjusting journal entry for $144,613. This entry impacted the 2nd and 3rd quarters 2004, but was deemed immaterial for adjustment. This was
Management’s best assessment at December 31, 2004.

 Difference on JE # 20

—

—

2

78

6

    86

 Note Payable Discount

The Company had historically accounted for the amortization of discounts on notes payable utilizing the straight line method determining that it was a reasonable approximation of
the effective interest rate method. At December 31, 2004 after the books were closed, Management determined that the straight line method no longer provided similar results when compared to the effective interest rate method. Management recorded
additional amortization expense of $85,814 while decreasing the remaining discount from $1,920,811 to $1,834,997. This entry impacted the 2nd and 3rd quarters 2004, but was deemed immaterial for adjustment. This was Management’s best assessment
at December 31, 2004.

 Difference on JE # 23

—

—

(38
)

(113
)

(113
)

(264)

 New York Leasehold Improvement

After closing of the books, Management reviewed the Fixed Asset accounts and determined that the Company had been recording the amortization of leasehold improvements to the New
York office (June 2004 occupancy date) incorrectly. The journal entry to record the amortization was incorrectly based on a one year amortization period instead of the seven year lease term. This adjusting journal entry reverses the seven months of
amortization expense from June 2004 to December 2004 based on the incorrect one year amortization period. Journal entry # 24 below adjusts for the correct seven year amortization period. This entry impacted the 2nd and 3rd quarters 2004, but was
deemed immaterial for adjustment. This is based on Management’s best assessment at December 31, 2004.

 Difference on JE # 24

—

—

6

18

17

    41

 New York Leasehold Improvement

 See journal entry # 23 for explanation.

 Difference on JE # 36

31

—

13

12

13

69

 Deferred Finance Costs

 The Company had historically
accounted for the amortization of deferred financing fees utilizing the straight line method determining that it was a reasonable approximation of the effective interest rate method. At December 31, 2004 after the books were closed, Management
determined that the straight line method no longer provided similar results when compared to the effective interest rate method. Management recorded additional amortization expense of $68,725 while decreasing the remaining unamortized balance of
deferred financing fees from $338,181 to $269,456. This entry impacted the 2nd and 3rd quarters 2004, but was deemed immaterial for adjustment. This was Management’s best assessment at December 31, 2004.

 Total Income Statement Impact

31

—

(49
)

(90
)

(105
)

(213
)

 Total Sales were

139,861

29,571

26,294

20,426

18,036

 Amount of adjustment above

31

—

(49
)

(90
)

(105
)

 This difference as a % of Sales

N/MS

N/A

N/MS

N/MS

N/MS

 Total Assets were

50,294

41,345

33,437

25,629

22,121

 Amount of adjustment above

31

—

(49
)

(90
)

(105
)

 This difference as a % of Assets

N/MA

N/A

N/MA

N/MA

N/MA

 Total Pre-Tax Loss was

(10,596
)

(5,857
)

(8,436
)

(4,163
)

(3,639
)

 Amount of adjustment above

31

—

(49
)

(90
)

(105
)

 This difference as a % of Pre-Tax Loss

-0.2926
%

N/A

0.5808
%

2.1619
%

2.8854
%

 N/MS - Significantly below 0.0000%
of Sales

 N/MA - Significantly below 0.0000% of Assets

 N/A - Not Applicable

 Management and the Aegis Audit
Committee deems these adjustments to be immaterial for any restatement purposes.

 Aegis Communication Group

 Audit Committee Meeting:

 March 23, 2005

 Status of Audit

•

We have completed most of the audit fieldwork on the consolidated financial statements of Aegis Communications Group, Inc. (the “Company”) for the year ended December 31,
2004. Our audit was performed in accordance with auditing standards of the PCAOB of the United States of America.

•

Several open items.

•

Based on information received to date, the Company would receive a going concern opinion.

•

The Company has had significant turnover in its accounting department and we have proposed numerous entries and progress has been slow.

•

The objective of our audit was to obtain reasonable - not absolute - assurance about whether the consolidated financial statements are free from material misstatements. The scope of
the work performed was substantially the same, and in some cases has been expanded, as that described in our Audit Plan dated January 6, 2005.

•

BDO will read the Company’s revised annual report on Form 10-K,