The following discussion of our results of operations and financial condition should be read in conjunction with the Financial Statements and Notes included in Part I. "Financial Information". This report contains forward looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 under Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.

Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions, and future performance, and involve known and unknown risks, uncertainties and other factors, which may be beyond our control, and which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements.

All statements other than statements of historical fact are statements that could be forward-looking statements. You can identify these forward-looking statements through our use of words such as "may," "will," "can" "anticipate," "assume," "should," "indicate," "would," "believe," "contemplate," "expect," "seek," "estimate," "continue," "plan," "point to," "project," "predict," "could," "intend," "target," "potential," and other similar words and expressions of the future.

Forward-looking statements may not be realized due to a variety of factors, including, without limitation:

º the impact of the global economic crisis which has and may continue to impact demand for our services;

º the inability to generate new sales and maintain profitability;

º the inability to attract and retain a sufficient number of highly skilled technical employees, particularly senior level technical personnel and project managers;

º changes in the political, regulatory, and economic conditions in India, which is where a substantial portion of our operations are located;

º effects of competition in the information technology services industry where there is a very high level of competition for employees and customers;

º restrictions imposed by U.S. immigration regulation which could affect the ability of our employees who are primarily Indian nationals to obtain the necessary work visas to work in the United States;

º future legislation impacting the off shore business model and increased anti-off-shoring sentiment in the United States and other jurisdictions could significantly affect the demand for our services and our customer delivery model.

º inability to maintain access to external funding;

º currency fluctuations may negatively impact our financial results, and this may in turn discourage investment.

º inability to maintain effective internal control over financial reporting or to remediate any weaknesses that may arise in the future;

º claims for damages by third parties, including liability claims arising from negligent acts, errors, mistakes or omission in rendering our IT professional services;

º our dependence on a limited number of large customers;

º a systems failure or disruption in telecommunications could disrupt our business and result in lost customers and negative publicity;

º dependence on a limited number of software partners;

º disruption to our operations, including disruptions caused by geopolitical conditions in India;

º the effects of volatility and lack of liquidity in our common stock;

º our inability to protect our intellectual property;

º third party claims that our services infringe on their intellectual property rights;

Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)

º we may be subject to increased tax liabilities, including if the spin-off in 2000 of our former subsidiary, SeraNova, is determined to be taxable. We could be liable in the range of $55 million to $65 million and related penalties (if assessed) and interest could increase the amount by $45 million to $55 million. In July 2000, we completed the tax-free spin-off of SeraNova, our former subsidiary. In March 2001, SeraNova and Silverline Technologies Limited ("Silverline") consummated the acquisition of SeraNova by Silverline. Had the acquisition of SeraNova by Silverline been contemplated at the time of the spin-off, the spin-off would have been a taxable transaction. Based upon the information available to the us, we believe that such acquisition was not contemplated at the time of the spin-off of SeraNova by Intelligroup, and accordingly should not impact the tax-free nature of the spin-off. However, if it were determined that the spin-off was taxable, Intelligroup may have to bear the liability to pay such tax liability, which would be material. Please refer to Note 9 to the financial statements on in our annual report on Form 10-K/A for the year ended December 31, 2008; and

º the factors listed under "Item 1A. Risk Factors" in our annual report on Form 10-K/A for the year ended December 31, 2008 and other reports that we file with the SEC.

All forward-looking statements are expressly qualified in their entirety by this cautionary notice. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this report. We have no obligation, and expressly disclaim any obligation, to update, revise or correct any of the forward-looking statements, whether as a result of new information, future events or otherwise. We have expressed our expectations, beliefs and projections in good faith and we believe they have a reasonable basis. However, we cannot assure you that our expectations, beliefs or projections will result or be achieved or accomplished.

Overview

The Company plans, consults, builds, supports and manages enterprise resource planning ("ERP") solutions based on SAP, Oracle, PeopleSoft and Microsoft applications and technology platforms and also provide services around business intelligence, ERP Infrastructure Management, E-Business ERP Integration, ERP Testing and business process outsourcing or "BPO" and knowledge process outsourcing or "KPO".

The Company helps its customers align and optimize their technology platforms, primarily their ERP systems, with their businesses. While historically ERP providers had focused on providing solutions for large market companies with revenues of over $5 billion such systems have increasingly become mission critical for companies with revenues of between $500 million and $5 billion ("Mid-Tier Market") or more, as these systems are used to help them drive greater revenue and productivity as well as to better manage and control costs.

The Company has worked to position itself as the "go-to" partner for companies looking for an ERP and extended ERP solutions partner particularly for Mid-Tier Market and that positioning provides it with an important competitive edge. This positioning is reflected in the fact that over 90% of our business is generated from ERP-driven projects.

In this Section, the Company will discuss the following: (i) key factors in evaluating the Company's financial performance; (ii) application of critical accounting principles, which explains the accounting principles necessary to understand how the Company records its financial information; (iii) results of operations - consolidated, in which the Company's consolidated results are compared period to period to recognize trends; (iv) results of operations by business segment, which allows the Company to compare the results of its different business units; (v) liquidity and capital resources; (vi) recent accounting pronouncements, which identifies new accounting literature that may have an impact on the Company's future results and (vii) a discussion of our business outlook.

Key Factors in Evaluating the Company's Financial Performance

Management believes the following factors should be considered when evaluating the Company's reported financial information contained in Management's Discussion and Analysis of Financial Condition and Results of Operations.

Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Revenue

The majority of the Company's revenue is derived from professional services rendered to customers. Revenue is typically recognized as services are performed. The Company's services range from providing customers with a single consultant to multi-personnel full-scale projects. Although the Company has contracts with many of its customers to provide its services, in general, such contracts are terminable upon relatively short notice, typically not more than 30 days. There can be no assurance that the Company's customers will continue to enter into contracts with the Company or that existing contracts will not be terminated. The Company provides its services either directly to end-user organizations, or as a member of a consulting team assembled by another IT consulting firm. Where contractual provisions permit, customers also are billed for reimbursement of expenses incurred by the Company on the customers' behalf.

Fixed Price Projects

The Company has provided services on certain projects in which it, at the request of the clients, offers a fixed price for its services. For the nine month period ended September 30, 2009, revenue derived from projects under fixed-time and fixed price service contracts represented approximately 38% and 10%, respectively, of the Company's total revenue. For the nine month period ended September 30, 2008, revenue derived from projects under fixed-time and fixed price service contracts represented approximately 29% and 10%, respectively, of the Company's total revenue. No single fixed price project was material to the Company's business during the three and nine month period ended September 30, 2009 and 2008. The Company believes that, as it pursues its strategy of providing application management services to customers, it will continue to offer fixed price projects. The Company believes that there are certain risks related to fixed price arrangements and thus prices such arrangements to reflect the associated risk. There can be no assurance that the Company will be able to complete such projects within the fixed price timeframes. The failure to perform within such fixed price contracts, if entered into, could have a material adverse effect on the Company's business, financial condition and results of operations.

Customer Concentration

The Company has derived and believes that it will continue to derive a significant portion of its revenue from a limited number of customers and projects. For the three month period ended September 30, 2009 and 2008, the Company's ten largest customers accounted for in the aggregate approximately 37% and 36% of its revenue, respectively. For the nine month period ended September 30, 2009 and 2008, the Company's ten largest customers accounted for in the aggregate approximately 38% and 37% of its revenue, respectively. During the three and nine month period ended September 30, 2009 and 2008, no single customer accounted for 10% or more of revenues. There can be no assurance that such customers will continue to engage the Company in the future at current levels of retention, if at all.

Software Partners

   For the three and nine month period ended September 30, 2009 and 2008, the
Company derived the following percentages of total revenue from projects in
which the Company implemented, extended, maintained, managed or supported
software developed by SAP and Oracle.

                                          Percentage of Revenues
                                 Nine Months                 Three Months
                            Period Ended Sep 30,         Period Ended Sep 30,
                             2009            2008          2009           2008
            SAP                 71 %           77 %         71 %            75 %
            Oracle              15 %           12 %         14 %            13 %
            e-Business           6 %            5 %          6 %             5 %
            Others               8 %            6 %          9 %             7 %
            Total              100 %          100 %        100 %           100 %

Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Markets

The Company currently serves the United States market with its headquarters in Princeton, New Jersey, and branch offices in Atlanta, Georgia, Naperville, Illinois and Milpitas, California. The Company also maintains local offices to serve the markets in India, the United Kingdom, Denmark, Japan and the United Arab Emirates.

Expenses

The Company's most significant cost is project personnel expenses, which consist of consultant salaries, payroll taxes, benefits and subcontractor fees. Thus, the Company's financial performance is based primarily upon billing margin (billable hourly rate less the cost to the Company of a consultant on an hourly basis) and personnel utilization rates (billable hours divided by paid hours).

Application of Critical Accounting Policies

The preparation of the Company's consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company's estimates, judgments and assumptions are continually evaluated based on available information and experience. Because of the use of estimates inherent in the financial reporting process, actual results could differ from those estimates.

Certain of the Company's accounting policies require higher degrees of judgment than others in their application. These include revenue recognition and allowance for doubtful accounts, impairments and estimation of useful lives of long-term assets, income tax recognition of current and deferred tax items, assumptions used in valuing stock-based compensation arrangements and fair value measurements, and accruals for contingencies.

While there have been no material changes to its critical accounting policies and estimates as identified in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations", included in the Company's annual report on Form 10-K/A for the fiscal year ended December 31, 2008, the Company has updated below the disclosure of its critical accounting policies to reflect more accurately the policies it has been following

Cash and Cash Equivalents

The Company considers all highly liquid debt instruments and other short-term investments with a maturity of three months or less, when purchased, to be cash equivalents.

The Company maintains cash balances at several financial institutions that are insured by the Federal Deposit Insurance Corporation up to $250,000. The Company maintains cash balances in excess of insured amounts.

The Company did not have any cash equivalents as at September 30, 2009 and December 31, 2008.

Revenue Recognition and Allowance for Doubtful Accounts

The Company generates revenue from professional services rendered to customers. Revenue is recognized under the Company's contracts generally when persuasive evidence of an arrangement exists, the sales price is fixed or determinable and collection of amounts billed is reasonably assured. The majority of our revenue is generated under time-and-material contracts whereby costs and revenue are recognized as services are performed, with the corresponding cost of providing those services reflected as cost of revenue. The majority of customers are billed on an hourly or daily basis whereby actual time is charged directly to the customer. Such method is expected to result in reasonably consistent profit margins over the contract term.

Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)

The Company also derives a portion of our revenue from fixed-price, fixed-time contracts. Revenue generated from most fixed-price contracts, including most application management and support contracts, is recognized ratably over the contract term. Certain fixed price contracts are for implementation services, including design and modification, for which specifications are provided by the customer. The scope of the work is usually defined in terms of overall deliverables and the revenue for such work is ultimately earned by achieving the deliverables. We consider the performance of service towards the planned deliverable as partial execution of the deliverable and hence the revenue generated from such fixed-price contracts is recognized using the POC method. The POC method recognizes the legal and economic results of contract performance on a timely basis. This method of accounting relies on estimates of total expected contract revenues and costs. Where the contracts involve only implementation services, the Company recognizes revenue based on a proportional performance method. The pattern of performance on these contracts closely resembles the time spent by our employees and therefore efforts-expended, measured based on the cost of the employee's time, is used as a measure for the proportion of services rendered in relation to the total services expected to be rendered.

The use of the POC method or the proportional performance method requires significant judgment relative to estimating the number of hours or days required to complete the contracted scope of work, including assumptions and estimates relative to the length of time to complete the project and the nature and complexity of the work to be performed. Our project delivery and business unit finance personnel continually review labor hours incurred and estimated total labor hours, which may result in revisions to the amount of recognized revenue for the contract. Changes in estimates are accounted for in the period of change. If we do not accurately estimate the resources required or the scope of work to be performed for a contract or if we do not manage the project properly within the planned time period, then a loss may have to be recognized on the contract. Losses are recorded in the period when they become known, and estimated through the completion of the contract.

We occasionally derive revenue from projects involving multiple revenue-generating activities. Accordingly, the revenue from such projects is accounted for in accordance with the ASC 605-25 (previously Emerging Issues Task Force of the Financial Accounting Standards Board ("FASB") Issue No. 00-21), "Accounting for Revenue Arrangements with Multiple Deliverables." If a contract involves the provision of multiple service elements, total estimated contract revenue is allocated to each element based on the relative fair value of each element. The amount of revenue allocated to each element is limited to the amount that is not contingent upon the delivery of another element in the future. Revenue for each element is then recognized as described above depending upon whether the contract is a time-and-materials contract or a fixed-price, fixed-time contract.

Any estimation process, including that used in preparing contract accounting models, involves inherent risk. We reduce the inherent risk relating to revenue and cost estimates in proportional performance models through approval and monitoring processes. Risks relating to service delivery, usage, productivity and other factors are considered in the estimation process.

The Company accrues for revenue and receivables for services rendered between the last billing date and the balance sheet date. Unbilled services as of September 30, 2009 and December 31, 2008 represent services provided through nine month period ended September 30, 2009 and the year ended December 31, 2008, respectively, which are billed subsequent to the balance sheet date. All such amounts are anticipated to be collected over the next twelve months.

Reimbursements of out-of-pocket expenses received from clients have been included as part of revenues in accordance with ASC 605 (previously EITF 01-14), "Income Statement Characterization of Reimbursements Received for "Out-of-Pocket" Expenses Incurred."

We establish billing terms at the time project deliverables are agreed, and we continually monitor timely payments from customers and assess collection issues. We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our clients to make required payments. We base our estimates on historical collection and write-off experience, current trends, credit policy, detailed analysis of specific client situations and percentage of accounts receivable by aging category.

                               INTELLIGROUP, INC.

Item 2 Management's Discussion and Analysis of Financial Condition and Results
of Operations (Continued)

Results of Operations - Consolidated - nine month period ended September 30,
2009 compared to nine month period ended September 30, 2008.

   The following table sets forth for the periods indicated certain financial
data expressed as a percentage of total revenue:

                                                           Percentage of Revenue
                                                     Nine months ended period Sep 30,
                                                         2009                  2008
    Revenue                                               100.0 %                100.0 %
    Cost of Revenues                                       66.5                   68.8
        Gross Profit                                       33.5                   31.2

    Selling general and administrative expenses            22.6                   22.9
    Depreciation and amortization                           2.0                    1.4
        Total operating expenses                           24.6                   24.3
        Operating income                                    8.9                    6.9

Interest income                                             0.1                    0.2
Interest expense                                           (0.1 )                 (0.3 )
Foreign currency transaction gain (loss), net               0.2                   (1.4 )
Other income, net of other expense                          0.7                    0.4
    Income before income tax provision                      9.8                    5.8
        Income tax provision                                1.7                    0.9
    Net income                                              8.1 %                  4.9 %

Nine month period ended September 30, 2009 compared to Nine month period ended September 30, 2008.

The following discussion compares the consolidated results of operations for the nine month period ended September 30, 2009 and 2008.

Revenue: Total revenue decreased by 22% or $26.2 million from $119.8 million for the nine month period ended September 30, 2008 to $93.6 million as compared to the nine month period ended September 30, 2009. The decrease was due to the impact of the challenging global economic environment. Despite adding 92 new customers during the nine month period ended September 30, 2009, the volume of our business declined as our customers and prospective customers deferred the decision-making on a range of IT services initiatives, particularly shorter-term projects. Due to decline in customer demand competitive pressures have resulted in downward pressure on pricing. Our on site rates reduced by 4% from an average rate of $106.7 during the nine month period ended September 30, 2008 to an average rate of $102.6 during the nine month period ended September 30, 2009. Our off shore rates were reduced by 7% from an average rate of $23.3 during the nine month period ended September 30, 2008 to an average rate of $21.6 during the nine month period ended September 30, 2009. Recently, however, we have seen signs that the market for IT services has begun to stabilize and therefore we are not expecting further significant declines in revenues on a sequential basis.

Cost of revenue and gross profit: The cost of revenue has decreased by 24.5% or 20.2 from $82.5 million for the nine month period ended September 30, 2008 to $62.3 million for the nine month period ended September 30, 2009. The decrease was attributable to the decrease in payroll costs by 9.7% due to decrease in the headcount, decrease in sub-contractors cost by 4.8% due to reduction in the headcount of sub-contractors, decrease in project related expenses by 6.7% due to decline in volume of services sold and decrease by 3.3% due to fluctuations in the functional currencies of the subsidiaries. Gross profit has decreased by 16.2% from $37.3 million for the nine month period ended September 30, 2008 to $31.3 million for the nine month period ended September 30, 2009. The decrease in gross profit was a result of the decrease in the revenues partially offset by the cost savings during the nine month period ended September 30, 2009. Gross margin has increased from 31.2% for the nine month period ended September 30, 2008 to 33.5% for the nine month period ended September 30, 2009. The increase in gross margin was due to improvement in utilization rate by 7%. The cost of revenue has decreased by 24% as opposed to a decrease in revenue by 22%, thereby contributing to an increase in gross margin.

Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Selling, general and administrative expenses: Selling, general and administrative expenses consist of salaries and related benefits for sales and general administrative personnel, facilities costs, related travel and entertainment and professional fees. Selling, general and administrative expenses decreased by 23.2% from $27.5 million for the nine month period ended September 30, 2008 to $21.1 million for the nine month period ended September 30, 2009. The decrease in selling, general and administrative expenses is due to
(i) reduction in operating lease rentals and maintenance by 4.1% due to relocation of the office facility, (ii) fluctuations in the functional currencies of the subsidiaries by 3.8%, (iii) sales commission and payroll expenses have decreased by 7.3% due to reduction in head count and revenue during the period and (iv) other advertising, insurance and general expenses have decreased by 8% in line with the decrease in the business of the Company.

Depreciation and amortization expenses: The Company recorded depreciation and amortization expenses of $1.9 million for the nine month period ended September . . .