<PAGE>
 
                      SECURITIES AND EXCHANGE COMMISSION
                           Washington,  D.C.  20549


                                   FORM 10-Q


                  QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                    OF THE SECURITIES EXCHANGE ACT OF 1934

FOR QUARTER ENDED SEPTEMBER 30, 1997              COMMISSION FILE NUMBER 1-7516

                                  KEANE, INC.
            (Exact name of registrant as specified in its charter)


   MASSACHUSETTS                                 04-2437166
   (State or other jurisdictions of              (I.R.S. Employer Identification
   incorporation or organization)                Number)
                                                
   Ten City Square, Boston, Massachusetts        02129
   (Address of principal executive offices)      (Zip Code)
 
   Registrant's telephone number, including area code (617) 241-9200

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
 
Yes   X        No      
    -----         -----

As of September 30, 1997, the number of issued and outstanding shares of Common
Stock (excluding 305,615 shares held in treasury) and Class B Common Stock were
65,857,978 and 286,882 shares, respectively.  The Company declared a 2 for 1
stock split on July 24, 1997, payable in the form of a stock dividend to holders
of record as of August 14, 1997, which was distributed on August 29, 1997, and
has been reflected in the number of Common Shares outstanding.


                                    1 of 14
<PAGE>
 
Keane, Inc. and Subsidiaries
TABLE OF CONTENTS

<TABLE> 
<CAPTION> 


Part I - Financial Information
 
<S>                                                                                      <C>
Consolidated Statements of Income for the three months and nine months
ended September 30, 1997 and 1996 (unaudited)..........................................    3
 
Consolidated Balance Sheets as of September 30, 1997 and
December 31, 1996 (unaudited)..........................................................     4
 
Consolidated Statements of Cash Flows for the nine months ended
September 30, 1997 and 1996 (unaudited)................................................     5
 
Notes to Unaudited Financial Statements................................................     6
 
Management's Discussion and Analysis of Financial Condition and Results of Operations..     8
 
Part II - Other Information............................................................    13

Signature Page.........................................................................    14

</TABLE>

                                    2 of 14
<PAGE>
 
KEANE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

<TABLE>
<CAPTION>
                                                            (IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
                                                          THREE MONTHS ENDED           NINE MONTHS ENDED
                                                            SEPTEMBER 30,                SEPTEMBER 30,
                                                         1997            1996          1997         1996
<S>                                                 <C>             <C>             <C>          <C>
Total revenues                                            $169,930        $120,900     $463,006     $339,736
 
Salaries, wages and other direct costs                     114,379          81,935      307,473      227,446
Selling, general and administrative expenses                32,042          24,570       89,457       71,848
Amortization of goodwill and other intangible                
         assets                                              3,509           3,120       10,527        9,378
 
     Operating income                                       20,000          11,275       55.549       31,064
 
Investment and dividend income                               1,181             411        2,997        1,509
Interest expense                                                51             127          151          340
Other expenses, net                                             34             155          549          444
 
     Income before income taxes                             21,096          11,404       57,846       31,789
 
Provision for income taxes                                   9,073           4,904       24,875       13,466
 
     Net income                                           $ 12,023        $  6,500     $ 32,971     $ 18,323
 
*Net income per share                                         $.18            $.10         $.49         $.28
 
*Weighted average shares outstanding                        67,693          66,676       67,449       66,299
 
 
*Adjusted to reflect the Company's 2 for 1 stock split in the form of a dividend that was distributed on
 August 29, 1997 to shareholders of record as of August 14, 1997.
 
</TABLE>
 
 
 
 
                 The accompanying notes are an integral part 
                   of the consolidated financial statements.


                                    3 of 14
<PAGE>
 
<TABLE>
<CAPTION>
KEANE, INC. AND SUBSIDIARIES                                                 (IN THOUSANDS)
CONSOLIDATED BALANCE SHEETS                                         SEPTEMBER 30,         DECEMBER 31,
                                                                      1997                   1996
Assets                                                            (UNAUDITED)
<S>                                                      <C>                     <C>
Current:
     Cash and cash equivalents                                        $ 14,639               $ 38,837
     Investments                                                        48,188                 30,242
     Accounts receivable, net
          Trade                                                        144,924                 94,773
          Other                                                          1,018                  2,447
     Prepaid expenses and other current assets                           7,700                  5,536
                                                                      --------               --------
          Total current assets                                         216,469                171,835
     Property and equipment, net                                        17,223                 10,658
     Intangible assets, net                                             36,288                 46,815
     Other assets                                                        8,590                  5,906
                                                                      --------               --------
                                                                      $278,570               $235,214
                                                                      ========               ========
Liabilities
Current:
     Accounts payable                                                   11,959                  9,825
     Accrued compensation                                               12,925                 11,036
     Accrued expenses and other liabilities                             11,407                  5,454
     Notes payable                                                       3,046                  3,191
     Income taxes payable                                                6,514                  5,677
     Current capital lease obligations                                     203                    236
                                                                      --------               --------
          Total current liabilities                                     46,054                 35,419
     Notes payable                                                       -----                  2,807
     Long-term portion of capital lease obligations                      -----                    358
Stockholders' Equity
     Common Stock                                                        6,616                  6,572
     Class B Common Stock                                                   29                     29
     Additional paid-in capital                                         95,558                 92,647
     Cumulative translation adjustment                                     (86)                   (46)
     Retained earnings                                                 132,812                 99,841
     Less treasury stock                                                (2,413)                (2,413)
                                                                      --------               --------
          Total stockholders' equity                                   232,516                196,630
                                                                      --------               --------
                                                                      $278,570               $235,214
                                                                      ========               ========
</TABLE>
                  The accompanying notes are an integral part
                   of the consolidated financial statements.

                                    4 of 14
<PAGE>
 
<TABLE>
<CAPTION>
KEANE, INC. AND SUBSIDIARIES                                              NINE MONTHS ENDED
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)                              SEPTEMBER 30,
                                                                              (IN THOUSANDS)
CASH FLOWS FROM OPERATING ACTIVITIES:                                    1997                 1996
<S>                                                               <C>                  <C>
Net income                                                                  $ 32,971             $ 18,323
Adjustments to reconcile net income to
     net cash provided by operating activities
       Depreciation and amortization                                          15,568               14,386
       Accrued interest on long term debt                                        148                  318
       Deferred income taxes                                                    (192)                 150
       Provision for doubtful accounts                                         1,544                1,600
       Loss on disposal of fixed assets                                           67                   24
     Changes in assets and liabilities, net of acquisitions:
       Increase in accounts receivable                                       (49,438)             (22,573)
       Increase  in prepaid expenses and other assets                         (4,657)              (1,104)
       Increase in income taxes payable                                          837                1,782
       Increase (decrease) in accounts payable,                                
        accrued expenses, and other current liabilities                        8,760                 (484)
                                                                               -----                ----- 
     NET CASH PROVIDED BY OPERATING ACTIVITIES                                 5,608               12,422  
CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchase of investments                                                 (40,773)             (13,023)
     Sale of investments                                                      22,828                8,141
     Purchase of property and equipment                                      (11,734)              (3,189)
     Proceeds from sale of assets                                                  8                   45
     Payment for acquisitions                                                   ----                 (289)
     Proceeds from sale of business unit                                         400                 ----
                                                                            --------             --------
     Net cash used for investing activities                                  (29,271)              (8,315)
 
CASH FLOWS FROM FINANCING ACTIVITIES:
     Payments under long-term debt                                            (3,491)              (2,695)
     Proceeds from issuance of common stock                                    2,956                2,974
                                                                            --------             --------
     Net cash (used for) provided by financing activities                       (535)                 279
                                                                            --------             --------
 
Net increase (decrease) in cash and cash equivalents                         (24,198)               4,386
Cash and cash equivalents, beginning of period                                38,837               21,913
                                                                            --------             --------
Cash and cash equivalents, end of period                                    $ 14,639             $ 26,299
                                                                            ========             ========
 
</TABLE>
                  The accompanying notes are an integral part
                   of the consolidated financial statements.

                                    5 of 14
<PAGE>
 
Keane, Inc. and Subsidiaries
Notes to Unaudited Financial Statements

Note 1.   The accompanying unaudited consolidated financial statements have
          been prepared in accordance with the accounting policies described in
          the Company's 1996 Annual Report on Form 10-K and should be read in
          conjunction with the disclosures therein.  All financial figures are
          in thousands of dollars, except per share amounts.  Prior period
          amounts have been restated to conform to current year presentations.

          In the opinion of management, these interim financial statements
          reflect all adjustments, consisting of normal recurring accruals,
          necessary to present fairly the financial position, results of
          operations and cash flows for the periods presented. Interim results
          are not necessarily indicative of results for the full year.

          On July 24, 1997, the Company declared a 2 for 1 stock spilt in the
          form of a dividend that was distributed on August 29, 1997 to
          shareholders of record as of August 14, 1997.  All Common shares and
          per share amounts included in these financial statements are given
          retroactive effect to the extent required for this stock split.
 
Note 2.   Computation of Earnings Per Share for Quarters Ending September 30,
          1997 and 1996.

<TABLE>
<CAPTION>
                                                                         1997      1996                
                                                                                                       
<S>                                                               <C>           <C>                    
          Primary                                                                                      
          Average shares outstanding                                                                   
                 Common                                                  65,837      65,336            
                 Class B Common                                             288         288            
          Net effect of dilutive options-based on the treasury                                         
                 stock method using average market price                                                      
                 Common Stock                                             1,568       1,052            
                                                                        -------     -------            
                         Total                                           67,693      66,676            
          Net income                                                    $12,023     $ 6,500            
                                                                                                       
          Per share amount                                                 $.18        $.10            

</TABLE>

                                    6 of 14
<PAGE>
 
KEANE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                           1997            1996

<S>                                                                  <C>               <C>
         Fully Diluted 
         Average Shares outstanding 
                Common                                                         65,837         65,336
                Class B Common                                                    288            288
         Net effect of dilutive stock options-based on the 
                treasury stock  method using higher of average market 
                price or period ending price                          
                Common Stock                                                    1,582          1,202
                                                                             --------      ---------
                         Total                                                 67,707         66,826
 
         Net income                                                          $ 12,023      $   6,500
 
         Per share amount                                                        $.18           $.10
 
Note 3.  Intangible assets consist of the following:                          9/30/97       12/31/96
 
                Goodwill                                                     $ 20,360      $  20,360
                Noncompetition agreements                                      22,203         22,203
                Customer-based intangibles                                     37,915         37,915
                Software                                                        8,089          8,089
                Other                                                           1,208          1,208
                                                                             --------      ---------
                                                                               89,775         89,775
                Less accumulated amortization                                  53,487         42,960
                                                                             --------      ---------
                                                                             $ 36,288      $  46,815
                                                                             ========      =========
</TABLE>
                                                                                
                                    7 of 14
<PAGE>
 
KEANE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

This Quarterly Report on Form 10-Q contains forward-looking statements.  For
this purpose, any statements contained herein that are not statements of
historical fact may be deemed to be forward-looking statements.  Without
limiting the foregoing, the words "believes," "anticipates," "plans," "expects,"
and similar expressions are intended to identify forward-looking statements.
There are a number of important factors that could cause the Company's actual
results to differ materially from those indicated by such forward-looking
statements.  These factors include, without limitation, those set forth below
under the caption "Certain Factors That May Affect Future Results."

Results of Operations
---------------------

The Company's revenues for the Third Quarter of 1997 were $169.9 million, a
40.6% increase over the same period last year.  Revenues for the first nine
months of 1997 were $463.0 million, a 36.3% increase over the same period last
year.  The increase in revenues is primarily attributable to increased sales of
the Company's Application Outsourcing, Development and Resolve 2000/TM/
Compliance projects.

Salaries, wages and other direct costs for the Third Quarter of 1997 were $114.4
million, or 67.3% of revenues, compared to $81.9 million, or 67.8% of revenues,
during the same period last year.  Salaries, wages and other direct costs for
the first nine months of 1997 were $307.5 million, or 66.4% of revenues,
compared to $227.4 million, or 66.9% of revenues, during the same period last
year.  With the increase in the Company's strategic services in the areas of
Application Outsourcing, Development and Resolve 2000/TM/ Compliance, the
Company has increased its average billing rate by more than the increases in
related technical salary cost. For the first nine months of 1997, the Company's
average billing rate increased 8% over the comparable period last year compared
to an increase of 4% in technical salaries over the same period.

Selling, general and administrative expenses (SG&A) for the Third Quarter of
1997 were $32.0 million, or 18.9% of revenues, compared to $24.6 million, or
20.3% of revenues, for the same period last year.  Year-to-date SG&A expenses
were $89.5 million, or 19.3% of revenues, compared to $71.9 million, or 21.1% of
revenues, for the same period last year.  The decrease in SG&A as a percentage
of revenues for the quarter and year to date is primarily attributable to an
increase in revenues that did not require a proportionate increase in costs.

                                    8 of 14
<PAGE>
 
KEANE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS


Amortization of goodwill and capitalized acquisition costs for the Third Quarter
of 1997 were $3.5 million, or 2.1% of revenues, compared to $3.1 million, or
2.6% of revenues, for the same period last year. Amortization of goodwill and
capitalized acquisition costs for the first nine months of 1997 were $10.5
million, or 2.3% of revenues, compared to $9.4 million, or 2.8% of revenues, for
the same period last year.

Interest and other related expenses for the Third Quarter of 1997 were $85,000
compared to $282,000 for the same period last year.  Interest and other related
expenses for the first nine months were $700,000 compared to $784,000 for the
same period last year.  The Company recognized investment income of $1,181,000
in the Third Quarter and $2,997,000 year to date compared to $411,000 and
$1,509,000, respectively, for the same period last year.  The increase in 
investment income is attributed to a larger investment balance compared to 
last year.

The Company's pre-tax income for the Third Quarter of 1997 was $21.1 million, or
12.4% of revenues, compared to $11.4 million, or 9.4% of revenues, for the same
period last year.  Pre-tax income for the first nine months of 1997 was $57.8
million, or 12.5% of revenues, compared to $31.8 million, or 9.4% of revenues,
for the same period last year.

The Company's effective tax rate for the Third Quarter of 1997 and the first
nine months of 1997 was 43.0% as compared to 43% and 42.4% for the corresponding
periods of 1996.

Net income and earnings per share for the Third Quarter of 1997 were $12.0
million and $.18 per share, respectively, compared to $6.5 million and $.10 per
share, respectively, for the same period last year.  Net income and earnings per
share for the nine months ended September 30, 1997 were 33.0 million and $.49
per share, respectively, compared to $18.3 million and $.28 per share,
respectively, for the same period last year.

Liquidity and Capital Resources
-------------------------------

The Company ended the Third Quarter of 1997 with cash, cash equivalents and
marketable securities totaling approximately $62.8 million, down from the
balance at December 31, 1996 of $69.1 million.  The decrease is primarily
attributable to the increase in accounts receivable and expenditures associated
with adding and expanding facilities to support the Company's growth.  The
Company's debt, including accrued interest, at the end of the Third Quarter of
1997 was $3.2 million, which consisted primarily of a non-interest bearing note
discounted at 7%, payable to NYNEX in January 1998.  The Company maintains and
has available a $20 million unsecured demand line of credit split equally
between two major Boston banks.

                                    9 of 14
<PAGE>
 
KEANE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS


In February, 1997, the Financial Accounting Standards Board issued SFAS No. 128,
"Earnings per Share," which will require adoption in fiscal year 1997.  This
statement specifies the computation, presentation, and disclosure requirements
of earnings per share.  The Company is in the process of determining the effect
of the adoption of this statement on its consolidated financial statements and
related disclosures.

CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS:  The following important
factors, among others, could cause actual results to differ materially from
those indicated by forward-looking statements made in this Quarterly Report on
Form 10-Q and presented elsewhere by management from time to time.

The Company has experienced and expects to continue to experience fluctuations
in its quarterly results.  Gross margins vary based on a variety of factors
including employee utilization rates and the number and type of services
performed by the Company during a particular period.  A variety of factors
influence the level of the Company's revenues in a particular quarter, including
general economic conditions which may influence its clients and potential
clients to invest in their information systems or to downsize their businesses,
the number, requirements, and nature of client engagements, employee utilization
rates, changes in the rate the Company is able to charge clients for its
services, acquisitions by the Company and other factors, many of which are
beyond the Company's control.  Since a significant portion of the expenses of
the Company do not vary relative to the Company's level of revenues, if revenues
in a particular quarter do not meet expectations, operating results will be
adversely affected, which may have an adverse impact on the market price of the
Company's common stock.  In addition, many of the Company's engagements are
terminable without client penalty.  An unanticipated termination of a major
project could result in an increase in underutilized employees and a decrease in
revenues and profits.  Finally, gross margins vary based on a variety of factors
including employee utilization rates and the number and type of services
performed by the Company during a particular period.

The Company believes that its future success will depend in large part on its
ability to continue to attract and retain highly-skilled technical and
management personnel.  The competition for such personnel is intense.  There can
be no assurance that the Company will be able to continue to attract and retain
qualified personnel necessary for the development of its business.



                                   10 of 14
<PAGE>
 
KEANE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS


In the past five years, the Company has grown significantly through
acquisitions, and the Company's future growth may be based in part on selected
acquisitions. The Company's ability to expand successfully by acquisitions
depend on many factors, including the successful identification and acquisitions
of businesses and management's ability to integrate and operate the new
businesses effectively. The Company competes for acquisition candidates with
other entities, some of whom have greater financial resources than the Company.
Increased competition for acquisition candidates may result in fewer acquisition
opportunities being made available to the Company as well as less advantageous
acquisition terms, including increased purchase prices. The anticipated benefits
from any acquisition may not be achieved unless the operations of the acquired
business are successfully combined with those of the Company in a timely manner.
The integration of the Company's acquisitions requires substantial attention
from management. The diversion of the attention of management, and any
difficulties encountered in the transition process, could have an adverse impact
on Keane's revenues and operating results. In addition, the process of
integrating such acquisitions could cause the interruption of, or a loss of
momentum in, the activities of some or all of these businesses, which could have
an adverse effect on the Company's operations and financial results.

The custom software services market is highly competitive and characterized by
continual change and improvement in technology. The market is fragmented, and no
company holds a dominant position. Consequently, Keane's competition for client
assignments and experienced personnel varies significantly from city to city and
by the type of service provided. Some of Keane's competitors are large and have
greater technical, financial and marketing resources and greater name
recognition in the markets they serve than does the Company. In addition,
clients may elect to increase their internal information systems resources to
satisfy their custom software development needs. The Company believes that the
basis for competition in the software services industry include the ability to
compete cost-effectively, develop strong client relationships, generate
recurring revenues, utilize comprehensive delivery methodologies, and achieve
organizational learning by implementing standard operational processes. In the
healthcare software systems market, Keane competes with some companies that are
large in the healthcare market and have greater financial resources than Keane.
The Company believes that significant competitive factors in the healthcare
software systems market include size and demonstrated ability to provide service
to targeted healthcare markets. There can be no assurance that the Company will
continue to compete successfully with its existing competitors or will be able
to compete successfully with any new competitors.


                                   11 of 14
<PAGE>
 
KEANE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

As a result of these and other factors, the Company's past financial performance
should not be relied on as an indication of future performance.  Keane believes
that period-to-period comparisons of its financial results are not necessarily
meaningful and it expects that results of operations may fluctuate from period
to period in the future.

                                   12 of 14
<PAGE>
 
KEANE, INC. AND SUBSIDIARIES
                          Part II - Other Information
--------------------------------------------------------------------------------


Item 6.  Exhibits and Reports on Form 8-K

  (a)  Exhibits - None.

  (b)  Reports on Form 8-K - The Company filed no reports on Form 8-K during the
       quarter ended September 30, 1997.


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<PAGE>
 
                                 SIGNATURES
--------------------------------------------------------------------------------

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                         KEANE, INC.
                                         (Registrant)



         November 5, 1997                 /s/ John F. Keane
Date __________________________       ___________________________________
                                           John F. Keane
                                           President



        November 5, 1997                 /s/ Wallace A. Cataldo
Date __________________________       ___________________________________
                                           Wallace A. Cataldo
                                           Vice President, Finance


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