COMPUTER OUTSOURCING SERVICES ANNOUNCES FISCAL 1995 RESULTS.

NEW YORK--(BUSINESS WIRE)--Jan. 30, 1996--Computer Outsourcing Services, Inc. ("COSI") (Nasdaq National Market: COSI) today announced financial results for the fiscal year ended October 31, 1995. (See attached table).

The 40% increase in revenues was principally attributable to strategic acquisitions that significantly strengthened the Company's presence in the payroll processing and outsourcing businesses. In this regard, Tru-Check Computer Systems was acquired as of January 1, 1994; Dayton Pay USA, Inc. was acquired as of June 1, 1994; Key-ACA, Inc. was acquired as of May 1, 1995; and MCC Corporation was acquired as of June 1, 1995. Overall, as compared to the prior year, revenues from the Company's outsourcing business were up 36%, while payroll processing revenues increased 49%.

Fiscal 1995 results were impacted by the ongoing process of consolidating all of the Company's operations into two divisions - payroll processing and outsourcing.

Specifically, COSI's payroll business is being standardized onto one processing system while the Company's outsourcing operations are in the process of being consolidated. In addition to the impact from these important steps, there were fourth quarter charges totalling $268,000 relating to the write-off of deferred software costs. The Company also recorded charges of approximately $371,000 relating principally to accounts receivable.

Zach Lonstein, COSI's President and Chief Executive Officer, commented, "In keeping with our long-term growth strategy, 1995 was a year of aggressive market expansion through acquisition as well as a year of significant investment in our internal operations. The investments we have made in standardizing payroll processing, consolidating outsourcing and integrating acquisitions were reflected in our operating results for 1995; these investments are continuing into 1996. Still, we significantly expanded the scope of our operations in 1995 and paved the way for a return to profitable operations in fiscal 1996."

COSI provides payroll and tax filing services to approximately 3,600 customers nationwide and offers other data processing services to companies in niche markets including publishing, direct marketing, apparel importing and manufacturing and health care. -0-

                               CONSOLIDATED INCOME STATEMENTS
                                 Year Ended    October 31,
                                    1995          1994

REVENUES                         $22,151,734  $ 15,872,202
INCOME/(LOSS) BEFORE PROVISION
FOR INCOME TAXES                    (950,458)       906,505
PROVISION/(BENEFIT) FOR
 INCOME TAXES                       (314,493)       405,889
NET INCOME/(LOSS)                  $(635,965)      $500,616

NET INCOME PER COMMON SHARE           $(0.19)          $.13

WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING                        3,646,436      3,325,487

CONTACT: Computer Outsourcing Services, Inc., New York

Roger Kaufman, CFO, 212/564-3730

or

COSI'S INVESTOR RELATIONS COUNSEL:

The Equity Group Inc.

Eileen Harris, 212/836-9605

Bob Goldstein, 212/371-8660