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November 19, 2004

Securities and Exchange Commission

Division of Corporate Finance

450 Fifth Street, N.W.

Washington D.C.  20549

  Attn:

  Linda van Doorn

  William Demarest

  Re:

  Watson Wyatt & Company Holding Form 10-K for the
  year ended June 30, 2004

  File No. 001-16159

Dear Ms. Doorn and Mr. Demarest:

We are submitting this letter in response
to your letter, dated October 29, 2004, to John Haley, President and Chief
Executive Officer of Watson Wyatt & Company Holdings (the Company).  The responses set forth below correspond to
each numbered paragraph in your letter.

In connection with our response, we
acknowledge the following:

•                  The Company is responsible for the adequacy and accuracy
of the disclosure in the filing;

•                  Staff comments or changes to disclosure in response to
staff comments do not foreclose the Commission
from taking any action with respect to the filing; and

•                  The Company may not assert staff comments as a defense
in any proceeding initiated by the Commission or any person under the federal
securities laws of the United States.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Fiscal Year Ended June 30, 2004, Compared to Fiscal Year Ended June 30, 2003

Revenue, page 29

1.              Advise us and disclose in future filings why consultant time spent
customizing administration systems has been
excluded from revenue.

The Company’s Technology Solutions Group (TSG) often provides
hosting arrangements for company-owned software programs in connection with on-going
consulting services to provide clients with various types of actuarial and
benefit services.  Ownership of the
technology and rights to the related code remains with the Company.  In these types of engagements, there is often
the need to tailor or modify our software to meet the defined needs of the
project or the client.

We understand that EITF 00-3 provides
guidance in this situation as it indicates:

“that a software element covered by
SOP 97-2 is only present in a hosting arrangement if the

customer has the contractual right to
take possession of the software at any time during the hosting period without
significant penalty and it is feasible for the customer to either run the
software on its own hardware or contract with another party unrelated to the
vendor to host the software.  Therefore,
SOP 97-2 only applies to hosting arrangements in which the customer has such an
option.  Arrangements that do not give the
customer such an option are service contracts and are outside the scope of SOP
97-2.”

Since our clients do not have the
right to take possession of the code for company-owned software programs, such software
is considered to be internally developed.
As a result, we do not recognize consulting time revenue from our
customization work during the customization phase of an engagement.  Rather, any cash collected in advance of
commencement of the hosting is treated as deferred revenue while the costs
associated with the customization effort are capitalized in  accordance with SOP 98-1.  Revenue under the contract, together with
amortization of the related capitalized customization costs, is recognized throughout
the service period.

We will expand and clarify our
disclosure in future filings.

Capital
Commitments, page 35

2.              In future filings, discuss whether or not you anticipate that the expected
increase in expenditures represents a
continued upward trend and why.

                        The
increase in cash commitments from $24.3 million in fiscal year 2004 to $37.9
million in fiscal year 2005 reflects approximately $10 million of dividends which are being
paid for the first time in fiscal year 2005, as well as $6 million in capital
expenditures in connection with the relocation of our largest office.  Going forward, we anticipate that our capital
expenditures will approximate $30 million per year.  We will clarify this point in future filings.

Off-Balance Sheet Arrangements and
Contractual Obligations

Guarantees, page 36

Affiliate
Agreements

3.              In future filings, clarify what is meant by Watson Wyatt LLP’s option to
return the leased space. Is the Company guaranteeing Watson Wyatt LLP’s lease
payments to a third-party, or is the Company sub-letting the space to Watson
Wyatt LLP?

In connection with our alliance with
Watson Wyatt LLP (WWLLP) in 1995, the Company’s then existing lease of office
space in London was terminated and a new lease was entered into by WWLLP.  The new lease expires in 2015 and the
obligations of WWLLP to the landlord under the new lease were guaranteed by the
Company.

The Company also entered into two option
agreements with WWLLP with respect to the leased space.  One option agreement provides WWLLP with the
right to require the Company to accept a sublease of two floors of the leased
space upon any termination of the alliance.
The second option agreement provides WWLLP with the right to assign the
entire lease to the Company on or after December 25, 2009.  We will adjust our disclosure to clarify the facts
as described above.

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Consolidated Financial Statements

Consolidated Statements of Operations

4.              Please supplementally advise us if you have recognized any revenue as a
result of the sale of software or technology products in connection with your
consulting engagements. If so, what consideration have you given to Rule 5-03
of Regulation S-X, which requires the amount of product revenue recognized to
be stated separately.

While the
Company in its 10-K speaks of technology products and services, in each case we
are referring to the provision of Company-owned software for which we provide
hosting arrangements, as discussed in our response to Question 1.  We do not have revenue as the result of the
sale of software or technology products.

Notes to
Consolidated Financial Statements

Note I - Summary of Significant Accounting Policies

5.              Expand your disclosure in future filings to discuss when revenue is
recognized under both fixed fee and time and materials engagements. For fixed
fee engagements, disclose if you recognize revenue based upon the percentage of
completion, achievement of certain milestones, or other method. Also disclose
how billable rates are determined, if the terms of contracts can be changed and
whether or not you have historically experienced cost overruns.  These disclosures should also be added to the
discussion of revenue recognition in the MD&A.

We will
expand our revenue recognition disclosure in future filings in order to
indicate the following:

•                  Revenue is recognized on both time-and-materials and fixed fee engagements
when hours are worked.

•                  For fixed fee engagements, which span multiple months, revenue is based
upon the percentage of completion method.
As we note in our response to Question 6, we periodically assess our
estimates to complete on our contract work.

•                  Individual consultants’ billing rates are principally based on salary and
compensation costs.  We believe,
therefore, that there is a direct correlation between cost incurred and the
underlying billing rates incurred as work progresses.

•                  The terms of our contracts with clients are fixed and determinable and can only
be changed based on agreement of both parties.
Contracts are written such that, in the unexpected event that the
customer cancels a contract, the Company gets paid for work performed through
cancellation.

•                  We have experienced certain cost overruns on a periodic basis, typically in
relation to customization of systems as discussed in our response to Question 1.  It is rare, however, for these overruns to
result in overall project losses.  We
recognize a loss on an engagement when estimated revenue to be received for
that engagement is less than the total estimated costs associated with the
engagement.  Losses are recognized in the
period in which the loss becomes probable and the amount of the loss is
reasonably estimable.

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6.              Supplementally
advise us why significant engagements in the Technology Solutions Group are the only projects that are periodically reviewed for
estimates to complete.

We typically perform our more detailed
reviews as estimates to complete for our TSG contracts, as other arrangements
are recurring, highly predictable and any of the isolated overruns/changes are
easily identified and captured on an individual project basis.

We typically have fixed fee contracts in
the following categories:

a)              Annual, recurring projects — Projects, typically in our Benefits
Group, for which we have not historically experienced losses due to many years
of continued service and our ability to accurately estimate the anticipated
level of effort.  Given the
straightforward nature of an engagement, the project manager and financial
staff are able to identify, as the project status is reviewed and bills are
prepared monthly, the rare occasion when cost overruns could lead to the
recording of a loss accrual.

b)             Projects of short duration — Many of our projects in our Human
Capital Group practice are for short duration (less than 3 months) and for
small dollar amounts.  As with our annual
recurring projects, we have had the ability to accurately estimate the level of
effort and have not experienced losses. Monthly reviews of the project status
enable the project manager and financial staff to identify cost overruns that
would lead to the recording of a loss accrual.

c)              Non-recurring, system projects — Projects within TSG tend to be
more complex, to incur changes in scope as the project progresses and to be longer
term projects. We evaluate, at least quarterly, and more often as needed,
project managers’ estimates to complete to assure that the project’s current
status is properly accounted for.

7.              We note that you develop various software programs and technologies for
clients in conjunction with your
consulting services. Supplementally advise us how you have evaluated the provisions of SOP 97-2 for engagements that involve the licensing, selling or leasing of your software products.

As noted in our response to
Question 1, the Company
provides hosting arrangements for company-owned software programs in connection
with on-going consulting services to provide clients with various types of
actuarial and benefit services.  Since
ownership of the technology and rights to the related code remain with the
company and do not transfer to our clients, accounting for these software
programs falls outside the scope of SOP 97-2, consistent with the guidance of
EITF 00-3.

Foreign Currency Translation, page 52

8.              You state that gains and losses from foreign currency
transactions are recognized currently in the Consolidated Statements of Operations. However, there is
no indication as to
which line item includes this. Revise in future filings to clarify.

Gains or
losses on foreign currency transactions are included in the “Occupancy,
communications and other” line of our Consolidated Statement of Operations.  We will clarify the location of these
gains/losses in future filings.  The
Company has experienced losses on foreign currency totaling $1.5 million, $0.2
million and $0.7 million in fiscal years 2004, 2003 and 2002, respectively.

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Note 2 - Initial Public Offering and Common Stock, page 55

9.              Explain to us why the number of shares repurchased in
April 2004 and the related dollar amount do not match the Consolidated
Statement of Changes in Stockholders’ Equity.

Our
disclosure in Note 2 reflected solely the 830,802 shares repurchased in our April
2004 tender offer whereas the Consolidated Statement of Equity reflects
purchases made on a year-to-date-basis and therefore includes an additional
510,900 shares repurchased during the first three quarters of fiscal year 2004.

Note 4-
Investments in Affiliates, page 56

10.       In your discussion of variable interest entities, you
state that FIN 46(R) requires consolidation by the primary beneficiary where
there is a controlling financial interest in a variable interest entity. This
definition appears to contradict paragraph 2 of FIN 46(R), since one of the
characteristics of a VIE is that equity investors lack a controlling interest.
Please revise the disclosure as necessary.

We agree
with the staff.  We will align our
description of FIN 46(R) in future filings with the description found in Note 1
on page 50 of the Company’s 10-K for the year ended June 30, 2004 in order to
avoid a perceived contradiction with the definition in paragraph 2 of FIN
46(R).

11.       Note 4 states that the Company has evaluated each of
its equity investments under FIN 46(R). Clarify to us whether any of the
Company’s consolidated subsidiaries or affiliates, such as Wellspring or GRS,
have been evaluated under FIN 46(R).

We have evaluated under FIN 46(R) our consolidated
subsidiaries as listed in Exhibit 21 of the 10-K for the year ended June 30,
2004, all of our affiliates as listed in Note 4 of the same 10-K and both Wellspring and GRS and believe that our accounting and disclosure is in
compliance with the pronouncement.

Note 6 - Retirement Benefits, page 58

12.       Explain to us why the reconciliation beginning and
ending balances of projected benefit obligation includes settlements, while the reconciliation for fair
value of plan assets does
not.

For the
fiscal year ending June 30, 2004, there was a FAS 88 settlement event due to
the sum of the cumulative fiscal year lump sum payments exceeding the sum of
the year’s service and interest costs.
In this situation, it is our understanding that FAS 88, paragraph 3, would
characterize the cash payments to be a “settlement” and, for this reason, the
cash payments under the U.S. non-qualified plan have been included in the
settlements line of the reconciliation of the beginning and ending projected
benefit obligation.  Since the
Non-Qualified plan has no plan assets, there can be no “settlement” as defined
in pension literature, and therefore we felt that the entire amount presented in
the reconciliation of the fair value of plan assets is best classified as
benefit payments to plan participants.

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Note 10 - Employee
Stock Plans and Equity

Dividends, page 72

13.       Please expand your disclosure
in future filings to include the pertinent provisions of your debt covenants
that restrict the payment of dividends. Also disclose the amount of retained
earning or net income that is restricted or free of restrictions. Refer to Rule
4-08 of Regulation S-X.

In response
to your question, we have re-reviewed our debt covenants and, after further
discussion with our bankers, have concluded that the payment of dividends and
our retained earnings are not restricted by our debt covenants.  We will be sure to correct the corresponding
disclosure in future filings.

Note 12 - Income
Taxes, page 74

14.       Identify to us the change in
accounting method that resulted in the adjustment to deferred income tax assets
in 2003.

The change
in accounting method is the adjustment related to changing from the cash method
of accounting to the accrual method of accounting when we went public in
October 2000.  Personal service
corporations are allowed to use the cash method of accounting.  When we performed our initial public offering,
we no longer satisfied the personal service corporation test and, therefore  were required to switch to the accrual method
of accounting.  Section 481 of the Internal
Revenue Code requires that the cumulative difference in the methods be included
in income over a four year period beginning in the year of the method
change.  Fiscal year 2004 was the final
income year to reflect the method change.

Note 13
- Se