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CORRESP
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January 24, 2007

Mr. Larry Spirgel
Assistant Director

Securities and Exchange Commission
Division of Corporate Finance
Mail Stop 3702
100 F.
Street, N.E.
Washington, D.C. 20549

Re:
Hudson
Highland Group, Inc.
For 10-K for Fiscal Year Ended December 21, 2005
Filed March 15, 2006

Form
10-Q/A for Fiscal Quarter Ended March 31, 2006
Form 10-Q for Fiscal Quarter Ended June
30, 2006
File No. 0-50129

Your
Letter of January 9, 2007

Ladies and Gentlemen:

We are writing in response to your
letter of January 9, 2007 to Ms. Mary Jane Raymond regarding your review comments on the
subject filings. Our responses are as follows, numbered in accordance with your comments.

Comment #1

Form 10-Q/A for Fiscal
Quarter Ended March 31, 2006

Note 2 – Restatement
of First Quarter 2006, Page 8

1.
We
note your response to prior comment 1 and your definitions of permanent
               placement revenue and permanent placement fall off. Tell us the terms of
your                agreements with your clients regarding the permanent placement of
candidates and                the timing of your obligations and rights under the
contracts. Please describe                for us your basis in the accounting literature
for your policy of recording                permanent placement revenue at the time of
acceptance of the offer of                employment. Tell us why you believe it is
appropriate to recognize this revenue                prior to the candidate beginning
work with your client.

Response to Comment #1

        Terms
of agreement with our clients on permanent placement

Our terms are typical for the
industry. Our terms for permanent placement revenue in the Americas reporting segment
(approximately $30 million in annual revenue, or 6.8% of the 2005 total for that segment)
are as follows:

•
Fee
is between 20 percent to 30 percent of the first year salary of the candidate depending
on the level and complexity of the role of the position.

•
Our
work is complete at the time the candidate accepts the client’s offer, and payment
is then due per our standard payment terms, typically net 10 days from such acceptance.

•
Fees
are not refundable.

•
If
the candidate leaves within the first 90 days subsequent to the date of employment with a
client (a cancellation), we generally agree to locate and refer a replacement candidate
at no additional fee if the client has paid the fees and the client informs us within
approximately 15 days.

We record revenue net of an
approximate 5 percent cancellation provision. This estimate is based on historical actual
cancellations observed over a large set of homogeneous transactions.

        Basis
in the Accounting Literature for Our Policy of Revenue Recognition

We use Staff Accounting Bulletin No.
104 (SAB 104) as our authoritative source for our policy of revenue recognition. Using the
four basic criteria of SAB 104, our analysis has been:

1
Persuasive
evidence of an arrangement exists.
We begin work on a placement through a variety of
sources, including reviewing public job posting boards and directly marketing candidates.
As is typical in the industry, we initiate this work at our own risk. Upon our presenting
a candidate in whom a client has interest, we agree with the client on the terms of
payment, including that payment is due from the client at the time of a
candidate-accepted offer.

2
Delivery
has occurred or services have been rendered.
The criterion for delivery is the acceptance
by the candidate of an agreed offer from the client. The acceptance of the offer by the
candidate is documented in writing. We record no revenue until this has occurred.

3
Seller’s
price to the buyer is fixed or determinable
Our fee level is set at various points in
the process depending on the relationship with the client, but in any event, the fee is
set by the time the candidate accepts the offer from the client. At the time of
delivery, the accepted candidate offer contains the first year salary. We record no
revenue before the salary is known and the calculation (the first year salary multiplied
by the percentage agreed) can be made.

4
Collectibility
is reasonably assured
We review the payment history of our clients and record revenue
for clients with good payment history. We also perform credit checks for new clients. In
cases where we believe collectibility is not reasonably assured, we record the revenue on
a cash basis. Collectibility has not been a significant issue historically.

We also note that our policy on
revenue recognition for contingent permanent placement is consistent with several of our
competitors, including Robert Half and Diversified Corporate Resources Inc. among others.

Comment #2

Form 10-Q for Fiscal
Quarter Ended June 30, 2006

Note 2- Basis of
Presentation and Description of Business, page 7

First Quarter 2006
Restatement and Related Matters, page 7

2.
We
note your response to prior comment 2 and have the following additional
          comments:

•
With
regards to the adjustment of $923,000, describe for us in more detail why you were not
able to determine the appropriate period to which the unbilled accounts receivable
related. Clarify whether this un-reconciled difference arose during your review of March
31, 2006 balance sheet reconciliations. If so, tell us why you did not also perform a
similar recreation of the detailed unbilled accounts receivable sub-ledger as compared to
the general ledger balance as of December 31, 2005 to determine whether the error existed
as of this date.

•
Please
provide us with a more detailed materiality analysis addressing why you did not restate
your financial statements as of December, 31, 2005 to reflect the error of $643,000. Your
analysis should address the impact of this error on net income and earnings per share,
calculated in accordance with GAAP, for the year ended December 31, 2005 as well as the
quarter and six months ended June 30, 2006. In addition, please address each of the
qualitative factors discussed in SAB 99.

Response to Comment #2

        First
Bullet regarding the $923,000 adjustment

The $923,000 un-reconciled difference
arose during our initial examinations of the accounts for May 31, 2006.

As to why we did not perform a
similar sub-ledger re-creation as of December 31, 2005 as we did as of March 31, 2006, it
is helpful to first describe the procedures we used leading up to December 31, 2005 in
connection with preparing to file our 2005 Form 10-K and related certifications.

At December 31, 2005, we were
cognizant of the fact that the PeopleSoft installation had been live for less that 6
months. In preparation to file our 2005 financial statements correctly, and recognizing
the practice that any new system installation be thoroughly tested for accuracy, we
undertook extensive substantive and analytical testing of our accounts receivable, both
billed and unbilled, with a particular concentration on the transactions generated by the
new PeopleSoft system. We performed extensive sample testing and tracking of transactions
through the system, as well as analytical reviews examining trends to prior and sequential
periods. This work resulted in a high level of comfort that the transactions being
captured by the PeopleSoft installation were accurate and properly recorded. We did not
identify any unexplained reconciling differences as of December 31, 2005 as a result of
this work. On the basis of this work, we filed our 2005 Form 10-K.

In May 2006, when we discovered the
issues leading to our first quarter 2006 restatement, we first re-evaluated the procedures
we undertook at December 31, 2005 as we noted on page 5 of our November 21, 2006 response
to you. We engaged additional accounting experts, with the knowledge and approval of our
external auditors and Audit Committee, to discuss what we did at year end to evaluate if
we had failed to identify the issues at year end. We did identify the items totaling
$643,000 as we disclosed, but we did not find any other differences relating to the year
ending December 31, 2005.

We then commenced the work for the
accounts from January 1, 2006 forward that we described in our response dated November 21,
2006. Upon completing that work on the accounts from January 1, 2006 forward, and having
this remaining $923,000 amount still unexplained, we evaluated our status with our
external auditors, accounting experts (including those with expertise in forensic
accounting), outside counsel and our Audit Committee.

In considering whether to undertake a
re-creation of the detailed unbilled accounts receivable sub-ledger as of December 31,
2005, as was done as of March 31, 2006, we first evaluated whether we had any indications
of intentional misstatement and found there were none. We then considered the following
additional factors for the $923,000:

a)
We
spent 11 weeks and $1.5 million on the reconciliation work and transactions
                    roll forward from January 1 to May 31, 2006 and the related
restatement. We                     estimated, based on the costs incurred for the work
already done, that we would                     likely incur over $2.5 million of
additional costs to re-create the analysis as                     of December 31 and
September 30, 2005, and take an estimated additional four                     months to
attempt to identify the source of $923,000 with no certainty of
                    finding it in those two quarters. We considered this in the context
of the SAB                     99 reference to the cost of correcting a misstatement and
felt that this would                     be considered a major expenditure to correct a
relatively small misstatement.                     We determined this expenditure would not be
warranted in our situation.

b)
We
considered it unlikely that this $923,000 amount was a single transaction or
                    entry since such an error would have likely been identified in prior
year                     closing procedures. Therefore, it was more likely that this
amount was composed                     of smaller entries and, as such, would be very
difficult to find, and was less                     likely to have a material impact on
any one given period.

We considered the general
improvement in our control environment surrounding the processing of revenue and
receivables in the 2 year period preceding the PeopleSoft implementation. We concluded that there was a good
likelihood that the cause of the error or errors arose in an earlier year, possibly
even prior to our spin-off at March 31, 2003.

In light of having no evidence that
the difference belonged in the first quarter of 2006 or in the fourth quarter of 2005, we
determined it was appropriate to record a reserve for this difference in the quarter in
which we found it, the second quarter of 2006.

        Second
bullet regarding the $643,000 difference

Below please find an analysis that
shows:

•
The
error as a percentage of the full year 2005 EBITDA, net income and earnings per share
(EPS)

•
The
error as a percentage of the quarter ended June 30, 2006 EBITDA, net income and EPS

•
The
error as a percentage of the first six months ended June 30, 2006 EBITDA, net income and
EPS

•
The
error as a percentage of the projected results for the entire year ended December 31,
2006, as of the beginning of August 2006.

     As Reported:
     2005 (1)
     Q2 2006
     Six Months

2006
     Projected 2006

     (amounts in thousands, except per share amounts)

      EBITDA

       $29,584

       $8,467

       $6,137

       $27,430

      Net Income
       $5,313

       $600

       $(7,480
        )
       $3,517
        (2)

 EPS - Basic
       $0.24

       $0.02

       $(0.31
        )
       $0.14

      EPS - Diluted
       $0.22

       $0.02

       $(0.31
        )
       $0.14

Shares Out - Basic
       22,295

       24,414

       24,318

       24,475

     Shares Out - Diluted
       23,674

       25,172

       24,318

       25,250

     Amounts assuming $643

     recorded in 2005:

      EBITDA
       $28,941

       $9,111

       $6,780

       $28,073

      Net Income
       $4,670

       $1,243

       $(6,837
        )
       $4,160

 EPS - Basic
       $0.21

       $0.05

       $(0.28
        )
       $0.17

      EPS - Diluted
       $0.20

       $0.05

       $(0.28
        )
       $0.17

 % Change - EBITDA
       -2.2
        %
       7.6
        %
       10.5
        %
       2.3
        %

      % Change - Net Income
       -12.1
        %
       107.2
        %
       8.6
        %
       18.3
        %

      % Change - EPS - Basic
       -12.5
        %
       150.0
        %
       9.7
        %
       21.4
        %

      % Change - EPS - Diluted
       -9.1
        %
       150.0
        %
       9.7
        %
       21.4
        %

Notes:

1.  These
are results as reported in 2005, not restated for the Highland Partners
                    discontinued operations treatment nor our  FAS 123 adoption.

2.  Projected net income for 2006 excludes an approximate $20
million subsequently-determined gain on the sale of the discontinued
operation

We considered the importance of the
misstatements as a relatively large percentage of net income and EPS, for the full year
2005, the second quarter of 2006 and as projected in August 2006 for the full year 2006.
The reason we concluded that these were not determinative was because we considered our
net income to be essentially break even and as such, not the most meaningful measure to
use in evaluating materiality. This assessment paralleled similar concepts subsequently
presented by Todd E. Hardiman of the SEC’s Division of Corporate Finance in his
December 12, 2006 speech.

We note Mr. Hardiman’s comments
relative to the concept of a “break-even year” which he suggested might be a
circumstance in which an otherwise material error measured on a quantitative basis may not
be considered material. As was referred to in our November 21, 2006 initial response, we
do view the 2005 results as essentially a break-even year on $1.4 billion in revenue. Our
analysis took into consideration Mr. Hardiman’s two cautions. The first caution
speaks to being a company that “regularly has razor thin margins or net income”.
The second caution speaks to uses of the break-even argument when a turnaround will be
prolonged or the earnings trend is not clear over multiple years. In our case, our net
income (loss) trend was, for 2003, 2004 and 2005, $(328.8), $(26.8), and $5.3 million,
respectively. We also expected to deliver profitability in 2006 relatively similar to 2005
after absorbing a one-time restructuring charge of at least $2.7 million, and greater
profitability thereafter.

We also considered Mr.
Hardiman’s views presented relative to the assessment of quarterly misstatements and
materiality and compared these interpretations of Opinion 28, paragraph 29 to our earlier
assessment. While Mr. Hardiman presented no conclusions, he seemed to place equal merit on
the position that prior period corrections could be assessed for materiality against
expected annual results, rather than only quarterly results, assuming full disclosure of
the correction. We also had applied similar thinking, as we noted in our earlier response,
relative to EBITDA, when we said the error would be about 3 percent of the expected 2006
full year EBITDA. We have noted this in the table. Therefore, we believe that the $643,000
recorded in the second quarter of 2006 is not per se material, since the amount is not
material for the year after considering a similar break even concept in 2006. As we note
in the table above, actual net income for 2006 will significantly exceed the expectation
in August 2006 due to the gain on the sale of the discontinued operation

While we considered the assessments
of the misstatements in reference to net income and EPS to be important, we respe