This Prospectus is filed pursuant to Rule 424(b)(3) and
                                 relates to Registration Statement No. 333-45663
================================================================================


                                   PROSPECTUS

                       COMPUTER OUTSOURCING SERVICES, INC.

              612,740 Shares Common Stock, par value $.01 per share

     This prospectus  constitutes a prospectus of Computer Outsourcing Services,
Inc., a New York corporation  (the "Company"),  with respect to the registration
for resale under the Securities Act of 1933, as amended (the "1933 Act"),  of an
aggregate of 612,740 shares of the Common Stock, par value $.01 per share of the
Company (the "Common  Stock"),  consisting in part of shares to be issued by the
Company  upon the  exercise of  warrants by certain of the selling  shareholders
described herein.

     The shares of Common Stock of the Company offered hereby (the "Shares") may
be sold from time to time by the holders thereof (the "Selling Shareholders") in
brokers'  transactions at prices  prevailing at the time of sale or as otherwise
described  in "Plan of  Distribution."  The Company  will not receive any of the
proceeds  from the  sale of the  Shares.  Expenses  of the  registration  of the
Shares,  including legal and accounting fees of the Company, will be paid by the
Company.   The  Selling  Shareholders  may  pay  usual  and  customary  brokers'
commissions.

     This Prospectus has been prepared for the purpose of registering the Shares
under the 1933 Act to allow  future  sales by the Selling  Shareholders  without
restriction. To the knowledge of the Company, the Selling Shareholders have made
no  arrangement  with any brokerage  firm for the sale of the Shares.  A Selling
Shareholder may be deemed to be an "underwriter"  within the meaning of the 1933
Act. Any commissions  received by a broker or dealer in connection with sales of
the Shares may be deemed to be  underwriting  commissions or discounts under the
1933 Act.

     The Shares have not been  registered for sale under the securities  laws of
any state or jurisdiction as of the date of this Prospectus.  Brokers or dealers
effecting  transactions  in the Shares should confirm the  registration  thereof
under the securities laws of the states in which such transactions occur, or the
existence of an exemption from registration.

     The Common Stock of the  Company,  including  the Shares,  is listed on the
NASDAQ  National  Market (the  "NASDAQ").  The last  reported  sale price on the
NASDAQ on January 29, 1998, was $8.00 per share.

                            _________________________

THESE  SECURITIES  HAVE NOT BEEN APPROVED OR  DISAPPROVED  BY THE SECURITIES AND
EXCHANGE  COMMISSION OR ANY STATE  SECURITIES  COMMISSION NOR HAS THE SECURITIES
AND  EXCHANGE  COMMISSION  OR ANY STATE  SECURITIES  COMMISSION  PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

                The date of this Prospectus is February 12, 1998




                              AVAILABLE INFORMATION

     The Company is subject to the informational  requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and, in accordance therewith,
files,  reports,  proxy statements and other information with the Securities and
Exchange  Commission ( the  "Commission").  Such reports,  proxy  statements and
other information filed by the Company may be inspected and copied at the public
reference  facilities  maintained by the  Commission at 450 Fifth Street,  N.W.,
Room 1024,  Washington,  D.C. 20549, and at the following Regional Office of the
Commission:  New York Regional  Office,  7 World Trade Center,  Suite 1300,  New
York, New York 10048. Copies of such material may also be obtained at prescribed
rates from the Public  Reference  Section of the Commission at 450 Fifth Street,
N.W., Washington D.C. 20549. The Company files its reports, proxy statements and
other information with the Commission electronically. The Commission maintains a
Web site that  contains  reports,  proxy and  information  statements  and other
information on issuers that file electronically with the Commission. The address
of such Web site is  "http://www.sec.gov".  The Company's Common Stock is listed
on the  NASDAQ.  Reports  and other  information  concerning  the Company can be
inspected and copied at the NASDAQ office at 1735 K Street N.W., Washington D.C.
20008.


                 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

     The following documents,  filed by the Company with the Commission pursuant
to the 1934 Act, are hereby incorporated by reference:

     1.   The  Company's  Annual Report on Form 10-KSB for the fiscal year ended
          October 31, 1997; and

     2.   The  description  of  the  Company's  Common  Stock  contained  in the
          Registration  Statement on Form 8-A of the Company, dated November 19,
          1992,  filed pursuant to Section 12 of the 1934 Act  (Commission  File
          No. 0-20824).

     Each document filed  subsequent to the date of this Prospectus  pursuant to
Section 13(a),  13(c),  14 or 15(d) of the 1934 Act prior to the  termination of
the  offering  made by this  Prospectus  shall be deemed to be  incorporated  by
reference in this Prospectus and shall be part hereof from the date of filing of
such  document;  provided,  however,  that  the  documents  enumerated  above or
subsequently  filed by the Company  pursuant to Section 13 of the 1934 Act prior
to the filing with the  Commission of the Company's most recent Annual Report on
Form 10-KSB shall not be  incorporated  by reference in this  Prospectus or be a
part from and after the filing of such Annual Report on Form 10-KSB.

     Any  statement  contained  in a  document  incorporated  or  deemed  to  be
incorporated  by reference  herein shall be deemed to be modified or  superseded
for purposes of this Prospectus to the extent that a statement  contained herein
or in any other  subsequently  filed document which is deemed to be incorporated
by reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.

     The  Company  has  filed  with  the  Commission  a  Registration  Statement
(together with any amendments thereto,  the "Registration  Statement") under the
1933 Act,  with  respect  to the shares of Common  Stock  offered  hereby.  This
prospectus does not contain all of the information set forth in the Registration
Statement and the exhibits and schedules  thereto.  Such additional  information
may be obtained  from the  Commission's  principal  office in  Washington,  D.C.
Statements  contained  in this  prospectus  or in any document  incorporated  by
reference  in this  prospectus  as to the  contents  of any  contract  or  other
document referred to herein or therein are not necessarily complete, and in each
instance  reference is made to the copy of such contract or other document filed
as an exhibit to the  Registration  Statement or such other document,  each such
statement being qualified in all respects by such references.

     The Company  will provide  without  charge to each  person,  including  any
beneficial  owner,  to whom a copy of this  Prospectus  is  delivered,  upon the
written or oral request of any such person,  a copy of any document  referred to
above which has been or may be  incorporated  in this  Prospectus  by reference,
other than exhibits to such  documents  (unless such  exhibits are  specifically
incorporated by reference into such documents).  Requests for such copies should





be directed to: Secretary,  Computer Outsourcing  Services,  Inc., 360 West 31st
Street, New York, New York 10001, (212) 564-3730.



                                   THE COMPANY

     Computer  Outsourcing  Services,  Inc. (the "Company") provides information
technology solutions which include comprehensive information processing services
to many industries, including publishing, transportation, financial services and
apparel  throughout the United States. The Company has grown through a number of
strategically located information processing companies.

     The Company's services, known as outsourcing, provide all or a portion of a
client's data processing functions.  These services consist of managing all of a
client's data  processing  requirements,  including  on-line order entry,  order
processing,  inventory, accounts receivable, accounts payable, sales history and
analysis and general ledger.  Clients'  computer systems can be linked by leased
data  circuits  to the  Company's  main frame  computer  center,  from which the
Company's support staff can provide service on an on-line, real-time basis.

     On  December  19,  1997,  the  Company  consummated  the sale of all of the
outstanding  capital stock of Daton Pay USA, Inc., Pay USA of New Jersey,  Inc.,
NEDS,  Inc. and Key-ACA,  Inc.,  all  wholly-owned  subsidiaries  of the Company
comprising its payroll processing division, to Zurich Payroll Operations Limited
for a purchase price of $14,400,000.  The Company plans to use the proceeds from
the sale to expand its  information  processing  services  business and to repay
outstanding debt.

     The Company's  principal  executive office is at 360 West 31st Street,  New
York, New York 10001; and its telephone number is (212) 564-3730.


                              SELLING SHAREHOLDERS

     The following table lists the Selling Shareholders, the number of shares of
Common Stock of the Company  beneficially owned by such Selling  Shareholders as
of the date of this  Prospectus,  the  number of shares  to be  offered  by such
Selling  Shareholders  and the number of outstanding  shares to be owned by such
Selling Shareholders after the sale.




                    Shares          Shares        Shares to be
    Selling          Owned           to be        Owned After
  Shareholder      Prior to     Offered Hereby    Offering (1)
                   Offering

Whitehall           33,275        33,275 (2)           0
Financial
Group, Inc.

Corporate            1,500         1,500 (2)           0
Securities
Group, Inc.

James D. Gerson     49,000        19,000 (2)         30,000
(3)

Allen Sacharow      10,000         10,000(2)           0

Rodd Macklin         3,000         3,000 (2)           0

George               2,500         2,500(2)            0
McGoldrick

Michael Stango       2,225         2,225 (2)           0

J.W. Charles        18,500        18,500 (2)           0
Securities,
Inc.

Steven C.            6,000         6,000 (2)           0
Jacobs

Coletta Dorado       3,000         3,000 (2)           0

Vincent Chiera       1,000         1,000 (2)           0

J.W. Charles        75,240        75,240 (2)           0
Financial
Services, Inc.

Anton and Detta   308,864(5)        248,864          60,000
Donde Trust (4)

Eugene B.           22,649          22,649             0
Monosson

Eugene B.            5,967           5,967             0
Monosson IRA

Earle G.            14,497          14,497             0
Phillips, Jr.

Earle G.             7,708           7,708             0
Philipps, Jr.
IRA

Charles J. Wolf     18,431          18,431             0
II

Robert J. Keyes     14,781          14,781             0

Mary Ann Dalton     25,579          25,579             0

Charles J. Wolf      4,024           4,024             0
II, IRA

Vincent Mongno      75,000        75,000 (2)           0
_______________
(1)  Assumes the sale of all of the Shares covered by  this
     Prospectus.
(2)  Represents shares issued or to be issued by the Company upon
     exercise of warrants.
(3)  Mr. Gerson is a director of the Company.
(4)  Anton P. Donde is the trustee of the Anton and Detta Donde
     Trust.  Mr. Donde is a director of the Company and served as
     President of the Pay USA Division of the Company from 1994 until
     December 19, 1997.  After completion of the offering, Mr. Donde
     will beneficially own 1.5% of the outstanding shares of Common
     Stock of the Company at January 16, 1997.
(5)  Includes 60,000 shares of Common Stock of the  Company
     beneficially owned by Anton Donde.





                                     EXPERTS

     The financial statements  incorporated in this Prospectus by reference from
the Company's  Annual Report on Form 10-KSB for the year ended October 31, 1997,
have been audited by Deloitte & Touche LLP, independent  auditors,  as stated in
their  report,  which is  incorporated  herein  by  reference,  and have been so
incorporated in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.


                                  LEGAL MATTERS

     The legality of the Shares has been passed upon for the Company by Robinson
& Cole LLP, Stamford, Connecticut, counsel for the Company.


                              PLAN OF DISTRIBUTION

     The Shares to be offered  pursuant to this  Prospectus are, and in the case
of Shares to be issued by the Company upon  exercise of warrants  will be, fully
paid and nonassessable and will be offered and sold by the Selling  Shareholders
for their own  accounts.  The Company will not receive any of the proceeds  from
these sales.

     The Selling Shareholders may offer and sell the Shares from time to time in
transactions  at market  prices  prevailing  at the time of sale,  at negotiated
prices or  otherwise.  Sales may be made to or  through  broker-dealers  who may
receive  compensation in the form of discounts,  concessions or commissions from
the  Selling  Shareholders  and/or  the  purchasers  of  Shares  for  whom  such
broker-dealers may act as agents and/or to whom they may sell as principals,  or
both (which  compensation as to a particular  broker-dealer  may be in excess of
customary commissions).

     If required, this Prospectus will be supplemented to set forth a particular
offering  of Shares to be made,  the number of Shares so offered for the Selling
Shareholder's  account  and,  if  an  offering  is  to be  made  by  or  through
underwriters  or  dealers,  the names of the  underwriters  or  dealers  and the
principal terms of the arrangements  between the underwriters or dealers and the
Selling Shareholders.

     The Selling  Shareholders and any broker-dealers  acting in connection with
the sale of the Shares hereunder may be deemed to be  "underwriters"  within the
meaning of Section 2(11) of the 1933 Act, and any  commissions  received by them
and any profit  realized  by them on the resale of Shares as  principals  may be
deemed underwriting compensation under the 1933 Act.


                                 INDEMNIFICATION

     The  Company's  Restated  Certificate  of  Incorporation  provides that the
Company's  directors have the authority to provide in the Company's  By-laws for
the indemnification of directors and officers to the fullest extent permitted by
law, including, without limitation to a greater extent than provided in Sections
721 through  726 of the New York  Business  Corporation  Law, as the same may be
amended and supplemented, or any successor provisions thereto.

     The Company's By-laws provide that: The Company shall indemnify any present
or former  officer or director of the  Company or the  personal  representatives
thereof,  made or threatened to be made a party in any civil or criminal  action
or proceeding by reason of the fact that he, his testator or intestate is or was
a  director  or  officer  of the  Company,  or  served  any  other  corporation,
partnership, joint venture, trust, employee benefit plan, or other enterprise in
any capacity at the request of the Company, against judgments,  fines (including
excise tax assessed on such a person in  connection  with service to an employee
benefit plan),  amounts paid in settlement and  reasonable  expenses,  including
without limitation,  court costs, attorneys' fees and disbursements and those of
accountants  and other  experts  and  consultants  incurred  as a result of such
action or proceeding or any appeal  therein,  all of which  expenses as incurred
shall be advanced by the Company pending the final disposition of such action or
proceeding. Such required indemnification shall be subject only to the exception
that no  indemnification  may be made to or on behalf of any director or officer
in the event and to the  extent  that a  judgment  or other  final  adjudication




adverse to the director or officer  establishes  that his acts were committed in
bad faith or were the  result  of  active  and  deliberate  dishonesty  and were
material to the cause of action so adjudicated,  or that he personally gained in
fact a financial  profit or other advantage to which he was not legally entitled
(provided,  that indemnification shall be made upon any successful appeal of any
such adverse judgment or final  adjudication).  For purposes of indemnification,
the Company shall be deemed to have  requested such present or former officer or
director to serve an employee  benefit plan where the performance by such person
of his duties to the  Company  also  imposes  duties on, or  otherwise  involves
services by, such person to the plan or  participants  or  beneficiaries  of the
plan. The foregoing right of  indemnification  shall not be deemed  exclusive of
any and other rights to which any such person,  his testator or interstate,  may
be entitled apart from this provision.

     Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors,  officers and controlling  persons of the
registrant pursuant to the foregoing  provisions,  or otherwise,  the registrant
has been advised that in the opinion of the Securities  and Exchange  Commission
such  indemnification  is against public policy as expressed in the 1933 Act and
is, therefore, unenforceable.


                                TABLE OF CONTENTS

                                                                  Page

          Available Information                                      2
          Incorporation of Certain Documents by Reference            2
          The Company                                                3
          Selling Shareholders                                       3
          Experts                                                    4
          Legal Matters                                              5
          Plan of Distribution                                       5
          Indemnification                                            5