<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, 2000
                         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, 2000, the number of issued and outstanding shares of Common
Stock (excluding 3,790,851 shares held in treasury) and Class B Common Stock
were 68,655,250 and 284,891 shares, respectively.
<PAGE>
KEANE, INC. AND SUBSIDIARIES
TABLE OF CONTENTS


Part I - Financial Information
<TABLE>
<CAPTION>
<S>                                                                                      <C>
Consolidated Statements of Income for the three months and nine months
ended September 30, 2000 and 1999 (unaudited)..........................................     3

Consolidated Balance Sheets as of September 30, 2000 and
December 31, 1999 (unaudited)..........................................................     4

Consolidated Statements of Cash Flows for the nine months ended
September 30, 2000 and 1999 (unaudited)................................................     5

Notes to Unaudited Financial Statements................................................     6

Management's Discussion and Analysis of Financial Condition and Results of Operations..    10

Part II - Other Information............................................................    16

Signature Page.........................................................................    17
</TABLE>

                                       2
<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,
<S>                                                        <C>            <C>               <C>           <C>
                                                                    2000              1999          2000          1999
Total revenues                                                  $219,671          $255,601      $657,678      $821,070

Salaries, wages and other direct costs                           153,964           171,410       463,770       536,110
Selling, general and administrative expenses                      49,996            50,484       153,444       153,984
Amortization of goodwill and other intangible assets               3,292             2,394         8,901         6,676
                                                                --------          --------      --------      --------

     Operating income                                             12,419            31,313        31,563       124,300

Investment income                                                  1,831             1,837         6,137         5,479
Interest expense                                                     130                 -           462             -
Other expenses, net                                                  236               501           689         1,222
                                                                --------          --------      --------      --------

     Income before income taxes                                   13,884            32,649        36,549       128,557

Provision for income taxes                                         5,624            13,223        14,803        52,320
                                                                --------          --------      --------      --------

     Net income                                                 $  8,260          $ 19,426      $ 21,746      $ 76,237
                                                                ========          ========      ========      ========

Net income per share (basic)                                       $0.12             $0.27         $0.31         $1.06
                                                                ========          ========      ========      ========

Net income per share (diluted)                                     $0.12             $0.27         $0.31         $1.05
                                                                ========          ========      ========      ========

Weighted average common shares outstanding (basic)                69,581            71,781        70,027        71,682

Weighted average common shares and common share                   69,804            72,467        70,526        72,518
 equivalents outstanding (diluted)
</TABLE>

   The accompanying notes are an integral part of the consolidated financial
                                  statements.

                                       3
<PAGE>

<TABLE>
<CAPTION>
KEANE, INC. AND SUBSIDIARIES                                                        (IN THOUSANDS)
CONSOLIDATED BALANCE SHEETS (UNAUDITED)                                   SEPTEMBER 30,            DECEMBER 31,
                                                                              2000                     1999
<S>                                                                   <C>                      <C>
Assets
Current:
     Cash and cash equivalents                                              $ 28,933                 $ 53,018
     Short-term investments                                                    2,189                    8,582
     Accounts receivable, net
          Trade                                                              199,303                  213,767
          Other                                                                  743                    2,248
     Prepaid expenses and other current assets                                17,735                   19,845
                                                                            --------                 --------
          Total current assets                                               248,903                  297,460
     Long-term investments                                                    76,071                   81,163
     Property and equipment, net                                              26,136                   27,330
     Intangible assets, net                                                  116,346                   93,885
     Other assets, net                                                        13,169                   14,987
                                                                            --------                 --------
                                                                            $480,625                 $514,825
                                                                            ========                 ========
Liabilities
Current:
     Accounts payable                                                       $ 13,268                 $ 18,500
     Accrued compensation                                                     29,604                   35,466
     Accrued expenses and other liabilities                                   29,112                   18,288
     Notes payable                                                             5,441                    7,564
     Income taxes payable                                                      8,502                        -
     Unearned income                                                           1,950                    8,369
     Current capital lease obligations                                         1,118                    1,080
                                                                            --------                 --------
          Total current liabilities                                           88,995                   89,267

     Long-term portion of capital lease obligations                            2,126                    2,610
     Notes payable                                                                 -                      149

Stockholders' Equity
     Common Stock                                                              7,245                    7,208
     Class B Common Stock                                                         28                       29
     Additional paid-in capital                                              121,432                  120,810
     Accumulated other comprehensive income                                   (2,742)                  (2,027)
     Retained earnings                                                       345,366                  323,620
     Less treasury stock                                                     (81,825)                 (26,841)
                                                                            --------                 --------
          Total stockholders' equity                                         389,504                  422,799
                                                                            --------                 --------
                                                                            $480,625                 $514,825
                                                                            ========                 ========
</TABLE>

   The accompanying notes are an integral part of the consolidated financial
                                  statements.

                                       4
<PAGE>

<TABLE>
<CAPTION>
KEANE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)                                           (IN THOUSANDS)
                                                                                    NINE MONTHS ENDED SEPTEMBER 30,
                                                                                      2000                   1999
<S>                                                                               <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                                          $ 21,746               $ 76,237
     Adjustments to reconcile net income to net cash
      provided by operating activities
     Depreciation and amortization                                                    20,952                 18,174
     Provision for doubtful accounts                                                    (878)                 4,028
     Gain on disposal of fixed assets                                                  1,176                     26
Changes in operating assets and liabilities, net of acquisitions:
           Increase in accounts receivable                                            (5,671)               (20,101)
     Decrease (Increase) in prepaid expenses and other assets                         36,195                 (4,856)
     Increase in income taxes payable                                                  8,896                  2,036
           Decrease in accounts payable, accrued expenses,
                 unearned income, and other current liabilities                      (15,833)               (18,850)
                                                                                    --------               --------
     NET CASH PROVIDED BY OPERATING ACTIVITIES                                        66,583                 56,694

CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchase of investments                                                         (28,449)               (65,057)
     Sale of investments                                                              39,932                 63,738
     Purchase of property and equipment                                              (11,584)               (10,510)
     Proceeds from sale of assets                                                         57                     56
     Payment for acquisitions                                                        (32,472)               (23,953)
                                                                                    --------               --------
     NET CASH USED FOR INVESTING ACTIVITIES                                          (32,516)               (35,726)

Cash flows from financing activities:
     Borrowings under notes payable and long-term debt                                     -                  8,210
     Payments under long-term debt                                                    (3,827)                   (91)
     Purchase of treasury stock, net                                                 (64,948)                (8,620)
     Proceeds from issuance of common stock                                           10,623                 10,323
                                                                                    --------               --------
     NET CASH PROVIDED BY(USED FOR) FINANCING ACTIVITIES                             (58,152)                 9,822
                                                                                    --------               --------

Net increase (decrease) in cash and cash equivalents                                 (24,085)                30,790
Cash and cash equivalents, beginning of period                                        53,018                 51,696
                                                                                    --------               --------
Cash and cash equivalents, end of period                                            $ 28,933               $ 82,486
                                                                                    ========               ========
</TABLE>

        The accompanying notes are an integral part of the consolidated
                             financial statements.

                                       5
<PAGE>

KEANE, INC. AND SUBSIDIARIES
Notes to Unaudited Financial Statements

Note 1.   The accompanying unaudited consolidated financial statements have been
          prepared in accordance with generally accepted accounting policies for
          interim financial information and with the instructions to Form 10-Q
          and Article 10 of Regulation S-X. Accordingly, they do not include all
          of the information and footnotes required by generally accepted
          accounting principles for complete financial statements. In the
          opinion of management, all adjustments (consisting only of normal
          recurring accruals) necessary for a fair presentation of the results
          of operations for the interim periods reported and of the Company's
          financial condition as of the date of the interim balance sheet have
          been included. Operating results for the nine-month period ended
          September 30, 2000 are not necessarily indicative of the results that
          may be expected for the year ending December 31, 2000.

          The balance sheet at December 31, 1999 has been derived from the
          audited financial statements at that date, but does not include all of
          the information and footnotes required by generally accepted
          accounting principles for complete financial statements.

          For further information, refer to the consolidated financial
          statements and footnotes thereto included in the Company's Annual
          Report on Form 10-K for the year ended December 31, 1999.

Note 2.   Computation of earnings per share for the three months and nine months
          ended September 30, 2000 and 1999.

<TABLE>
<CAPTION>
                                                        THREE MONTHS ENDED              NINE MONTHS ENDED
                                                           SEPTEMBER 30                    SEPTEMBER 30
                                                       2000            1999            2000            1999
<S>                                          <C>             <C>             <C>             <C>
Net income                                          $ 8,260         $19,426         $21,746         $76,237

Weighted average number of common                    69,581          71,781          70,027          71,682
shares outstanding used in calculation
of basic earnings per share

Incremental shares from the assumed                     223             686             499             836
 exercise of dilutive stock options

Weighted average number of common shares             69,804          72,467          70,526          72,518
 outstanding used in calculation of
 diluted earnings per share

Earnings per share

             Basic                                  $  0.12         $  0.27         $  0.31         $  1.06
                                                    =======         =======         =======         =======

             Diluted                                $  0.12         $  0.27         $  0.31         $  1.05
                                                    =======         =======         =======         =======
</TABLE>

                                       6
<PAGE>

Keane, Inc. and Subsidiaries
NOTES TO UNAUDITED FINANCIAL STATEMENTS

Note 3.   The Company offers an integrated mix of end-to-end business solutions,
          such as Business and IT consulting (Plan), e-Solutions including e-
          architecture, online branding, development and integration (Build),
          and Application Development and Management Outsourcing (Manage).
          Approximately 96% of the Company's revenues were derived from these
          offerings, with the balance from the healthcare industry. Effectively,
          the Company operates in one reportable segment.

Note 4.   Total comprehensive income, (i.e. net income plus available-for-
          sale securities valuation adjustments and currency translation
          adjustments to stockholders equity) for the third quarter of fiscal
          2000 was $8.7 million and $21.1 million year to date, and for third
          quarter of fiscal 1999 was $19.3 million and $76.6 million year to
          date.

Note 5.   In the fourth quarter of 1999, the Company recorded a restructuring
          charge of $13.7 million. Of this charge $3.8 million related to a
          workforce reduction of approximately 600 employees, primarily
          consultants. In addition, the Company performed a review of its
          business strategy and concluded that consolidating some of its branch
          offices was key to its success. As a result of this review, the
          Company wrote off $4.8 million of impaired assets, which included the
          carrying value of specific assets associated with these branch
          offices, and incurred charges of $3.8 million for branch closings and
          $1.3 million for payments to certain employees.

          A summary of fiscal 2000 activity with respect to the restructuring
          charge is as follows:

<TABLE>
<CAPTION>
                                                     Branch
                            Workforce                Office                  Payments to
                            Reduction                Closures                Certain Employees                Total
                            -----------------------  ----------------------  -------------------------------  --------
<S>                         <C>                      <C>                     <C>                              <C>
Balance 12/31/99               $2,800                  $2,981                           $1,300                  $7,081

Cash Expenditures               2,033                     197                            1,300                   3,530

Balance 03/31/00                  767                   2,784                                0                   3,551
Cash Expenditures                 767                       -                                -                     767
                               ------

Miscellaneous Adjustment            -                     151                                -                     151
                               ------                  ------                           ------                  ------
Balance 06/30/00                    0                   2,935                                0                   2,935
Cash Expenditures                   -                     154                                -                     154
                               ------                  ------                           ------                  ------

Balance 9/30/00                $    0                  $2,781                           $    0                  $2,781

</TABLE>

                                       7
<PAGE>

Note 6.   In December 1999, the Securities and Exchange Commission ("SEC")
          issued Staff Accounting Bulletin 101 ("SAB 101"), " Revenue
          Recognition in Financial Statements. SAB 101 provides guidance related
          to revenue recognition based on interpretation and practices by the
          SEC. SAB 101A was released in March 2000 and deferred the effective
          date to no later than the second fiscal quarter beginning after
          December 15, 1999. In June 2000, the SEC issued SAB 101B, which
          delayed the implementation date of SAB 101 until no later than the
          fourth fiscal quarter of fiscal years beginning after December 15,
          1999. The Company believes this interpretation will not have a
          significant impact on its financial position or results of operations.

          In June 1998, the Financial Accounting Standards issued Statement of
          Financial Accounting Standards No. 133, (FAS 133), " Accounting for
          Derivative Instruments and Hedging Activities", which required
          adoption in periods beginning after June 15, 1999. FAS 133 was
          subsequently amended by Statement of Financial Accounting Standards
          No. 137, " Accounting for Derivative Instruments and Hedging
          Activities- Deferral of the Effective Date of FASB Statement No. 133"
          and will now be effective for fiscal years beginning after June 15,
          2000, with earlier adoption permitted. In June 2000, the FASB issued
          Statement No. 138. " Accounting for Certain Derivative Instruments and
          Certain Hedging Activities", an amendment to FAS 133 and effective
          simultaneously with FAS 133. The Company will adopt FAS 133 as amended
          by FAS 138 in fiscal 2001 and does not expect the Statement to have a
          significant impact on its financial position or results of operations.

          In March 2000, the Financial Accounting Standard Board ("FASB") issued
          Interpretation No. 44, " Accounting for Certain Transactions Involving
          Stock Compensation, an Interpretation of APB No. 25." The
          interpretation will be applied prospectively to new awards,
          modifications to outstanding awards, and changes in employee status on
          or after July 1, 2000. FIN 44 is effective for certain other
          modifications such as re-pricing, which occur on or after December 15,
          1998. The Company believes the adoption of this interpretation will
          not have a significant impact on its financial position or results of
          operations.

Note 7.   In July 2000, the Company purchased substantially all of the assets
          of Denver Management Group, Inc. ("DMG") for approximately $12.5
          million. DMG is a management consulting firm focused on supply chain
          management practice. The acquisition was accounted for by the purchase
          method of accounting. Accordingly, the assets acquired have been
          recorded at their fair values at the date of acquisition.  The excess
          of the purchase price over the fair value of the net assets acquired
          has been allocated to identifiable intangibles and goodwill and is
          being amortized on a straight-line basis over a 3 to 15-year period.
          The results of operations for DMG are included in the accompanying
          consolidated financial statements from the date of acquisition.

          In September 2000, the Company purchased the outstanding stock of
          Care Computer Systems, Inc. ("Care") for approximately $ 20.0 million.
          Care is a leading provider of software solutions for the long-term
          care industry. The acquisition of Care will be accounted for by the
          purchase method of accounting. Accordingly, the assets acquired will

                                       8
<PAGE>

          be recorded at their fair value at the date of acquisition. The excess
          of purchase price over the fair value of the net assets acquired will
          be allocated to identifiable intangibles and goodwill and will be
          amortized on a straight-line basis over 3 to 15 year periods. The
          results of operations for Care are included in the accompanying
          consolidated financial statements from the date of acquisition.

                                       9
<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.  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 revenue for the third quarter of 2000 was $219.7 million, a 14%
decrease from $255.6 million in the third quarter of 1999, due to the
anticipated and rapid decline of Y2K compliance revenue. Y2K-related revenue
declined 100% to $0 million for the third quarter 2000, as compared to $40.9
million for the third quarter of 1999.  The Company anticipates no such revenue
in subsequent quarters. Keane's core Plan, Build, Manage revenue, excluding Y2K
compliance, was down 1% sequentially from the second quarter of 2000 due to
seasonal factors such as increased holidays and employee vacations.  However,
core Plan, Build, and Manage revenues were up 2% from the third quarter of last
year, and for the first nine months of 2000.   Keane's internet-related business
increased to an annualized run rate of $169 million, an increase of 64% from the
third quarter of 1999 and up 7% sequentially from the second quarter of this
year.  Internet-related business for the first nine months of 2000 was up 75%
from the same period a year ago.  The Company anticipates that its Internet-
related revenues will continue to grow rapidly as clients seek to leverage
Internet technology to reduce costs associated with business processes such as
supply chain and logistics, and or to invest in B2B software applications in
order to support e-markets or e-trading systems.

Third quarter 2000 revenue from the Company's Plan Services was $19.2 million,
down from $26.2 million in the third quarter last year. For the first nine
months of the year, Plan revenues were $82.9 million, up 4.6% from $86.7 million
during the same period in 1999.  Plan revenue is primarily comprised of business
innovation consulting and IT consulting services, which assist companies in
developing new strategies, plans to operationalize their strategies, as well as
new business processes, organizational structures and IT infrastructures,
leveraging the Internet and positioning themselves within the new digital
economy.  Third quarter 2000 revenue from the Company's Build Services was $82.7
million representing a 3.3% decrease from $85.6 million during third quarter of
last year.  Build revenues for the first nine months of 2000 were $244.0
million, down 4.1% from $254.4 million during the first nine months of 1999.
Build revenue primarily consists of implementing e-solutions, e-Customer
Relationship Management systems, e-architecture and data-warehousing services,
custom application development projects and licensing and implementing the
Company's proprietary suite of hospital and long-term care application software
products.  Third quarter 2000 revenue from the Company's Manage services was
$112.1 million, up 19.5% from $93.8 million during the third quarter 1999.
Manage revenues for the first nine months of 2000 were $324.6 million, up 15.2%
from $281.7 million during the same period last year.  Manage revenue primarily
consists of Application Development and Management (ADM) Outsourcing services,
Call Center Outsourcing, and other activities related to managing and

                                       10
<PAGE>

enhancing business applications. Approximately $2.9 million of foreign exchange
negatively impacted the year-to-date revenues from the Company's UK operations.

Salaries, wages and other direct costs for the third quarter of 2000 were $154.0
million, or 70.1% of revenue, compared to $171.4 million, or 67.1% of revenue
for the third quarter of 1999. Salaries, wages and other direct costs for the
first nine months of 2000 were $463.8 million, or 70.5%, of revenue, compared to
$536.1 million, or 65.3% of revenue, during the same period last year. This
increase as a percentage of revenue is primarily a result of the fixed nature of
these costs and the decline of revenues.

Selling, General & Administrative ("SG&A") expenses for the third quarter of
2000 were $50.0 million, or 22.8% of revenue, compared to $50.5 million, or
19.8% of revenue, for the third quarter last year. However, SG&A expense was
down sequentially from $52.2 million, or 23.5% of revenue for the second quarter
of 2000.  SG&A expenses for the first nine months of 2000 were $153.4 million,
or 23.3% of revenue, versus $154.0, or 18.8% of revenue for 1999. The increase
as a percentage of revenue was primarily attributable to the decrease in
revenues, and continued investments by the Company in the development and
marketing of its core service offerings. The decrease as a percentage of revenue
on a sequential basis reflects the Company's efforts to bring SG&A costs in
alignment with revenues.

Amortization of goodwill and other intangible assets for the third quarter of
2000 was $3.3 million, or 1.5% of revenue, compared to $2.4 million, or 0.9% of
revenue, in the third quarter of 1999.  Amortization of goodwill and capitalized
acquisition costs for the first nine months of 2000 were $8.9 million, or 1.4%
of revenue, compared to $6.7 million, or 0.8% of revenue, for the same period
last year. The increase in amortization was attributable to additional
intangible assets as a result of the Company's acquisitions of Denver Management
Group in July of 2000, and Care Computer Systems in September of 2000.

Interest and dividend income totaled $1.8 million for the third quarter of 2000
and 1999.  Interest and other expenses for the second quarter of 2000 was $0.4
million, compared to $0.5 million for the same period last year.

The Company's effective tax rate for the third quarter of 2000 and 1999 was
40.5%.

Net income and earnings per share for the third quarter of 2000 were $8.3
million and $0.12 per share diluted, as compared to $19.4 million and $0.27 per
share diluted for the third quarter last year.  However, net income was up 3.6%,
sequentially from the second quarter of 2000.  Net income for the first nine
months of 2000 was $21.7 million or $0.31 cents per share diluted, versus $76.2
million or $1.05 earnings per share diluted during the same period of 1999.

In the fourth quarter of 1999, the Company recorded a restructuring charge of
$13.7 million. Of this charge, $3.8 million related to a workforce reduction of
approximately 600 employees, primarily consultants. In addition, the Company
performed a review of its business strategy and concluded that consolidating
some of its branch offices was key to its success. As a result of this review,
the Company wrote off $4.8 million of impaired assets, which included the
carrying value of specific assets associated with these branch offices, and
incurred charges of $3.8 million for branch closings and $1.3 million for
payments to certain employees.

                                       11
<PAGE>

The fiscal 2000 activity against the accrued restructuring charge has proceeded
as planned by management. Refer to Note 5 to the Unaudited Interim Financial
Statements for a summary of this activity.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

The Company's cash and investments at the end of the third quarter of 2000
decreased to $107.2 million as compared to a balance of $132.1 million at the
close of the second quarter. This decrease was primarily attributable to the
repurchase of the Company's common stock in the amount of approximately $15.5
million, as well as the purchase of Denver Management Group and Care Computer
Systems during the third quarter for approximately $12.5 million and $20.0
million, respectively.  During the third quarter, Keane invested $15.5 million
of its cash to buy shares of its stock at prices ranging from $16.81 to $19.75.
Keane repurchased 873,000 shares of stock, at an average price of $17.75 per
share during the quarter.

On October 26, the Company's Board of Directors increased the Company's stock
repurchase authorization by an additional one million shares of common stock.
This increase, when combined with the remaining 1.1 million shares available for
purchase under the share authorization approved by the Company's Board of
Directors on July 24, 2000 brings the Company's current authorization to 2.1
million shares.  The cost associated with the purchase of the remaining 2.1
million shares should be approximately $28.0 million.

The Board of Directors have  approved three stock repurchase programs in the
last seventeen months. On May 27, 1999 the board authorized the repurchase of up
to one million shares of its common stock; on February 10, 2000, the board
authorized the repurchase of up to two million shares of its common stock; and
on July 26, 2000 the board authorized the repurchase of up to two million shares
of its common stock. Keane has repurchased and retired, as of September 30,
approximately 3.9 million shares of common stock at a cost of approximately $89
million, including 873,000 shares of common stock repurchased during the third
quarter of 2000.

The Company maintains and has available a $20 million unsecured demand line of
credit with a major Boston bank for operations and acquisitions opportunities.

Based on the Company's current operating plan, the Company believes that its
cash and cash equivalents on hand, cash flows from operations, and its current
available line of credit will be sufficient to meet its current capital
requirements for least the next twelve months.

IMPACT OF INFLATION AND CHANGING PRICES
---------------------------------------

Inflationary increases in costs have not been material in recent years and, to
the extent permitted by competitive pressures, are passed on to clients through
increased billing rates.  Rates charged by the Company are based on the cost of
labor and market conditions within the industry.  The Company was able to
increase its billing rates over its increases in direct labor costs in 1999.
This is due primarily to the Company's increase in strategic services such as
business innovation consulting and e-solutions, in which the high value of
services commands higher rates.

                                       12
<PAGE>

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.

FLUCTUATIONS IN OPERATING RESULTS.  Keane has experienced and expects to
continue to experience fluctuations in its quarterly results.  Keane's gross
margins vary based on a variety of factors including employee utilization rates
and the number and type of services performed by Keane during a particular
period.  A variety of factors influence Keane's revenue in a particular quarter,
including:

 .    general economic conditions which may influence investment decisions or
     cause downsizing;

 .    the number and requirements of client engagements;

 .    employee utilization rates;

 .    changes in the rates Keane can charge clients for services;

 .    acquisitions; and

 .    other factors, many of which are beyond Keane's control.

A significant portion of Keane's expenses does not vary relative to revenue.  As
a result, if revenue in a particular quarter does not meet expectations, Keane's
operating results could be materially adversely affected, which in turn may have
a material adverse impact on the market price of Keane common stock.  In
addition, many of Keane'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 revenue and profits.

RISKS RELATING TO ACQUISITIONS.  In the past five years, Keane has grown
significantly through acquisitions.  Since January 1, 1999, Keane has completed
the acquisitions of Emergent Corporation in San Mateo, California; Amherst
Consulting Group, Inc, in Boston, Massachusetts; Advanced Solutions Inc. in New
York, New York; Anstec, Inc. of Maclean, Virginia; First Coast Systems, Inc. of
Jacksonville, Florida; Jamison/Gold, LLC, of Marina Del Ray, California and
Parallax Solutions Limited, of Birmingham, England, Denver Management Group, of
Denver, Colorado, and Care Computer Systems, of Seattle, Washington.  Keane's
future growth may be based in part on selected acquisitions.  At any given time,
Keane may be in various stages of considering such opportunities.  Keane can
provide no assurances that it will be able to find and identify desirable
acquisition targets or that it will be successful in entering into a definitive
agreement with any one target.  Also, even if a definitive agreement is reached,
there is no assurance that any future acquisition will be completed.

Keane typically anticipates that each acquisition will bring certain benefits,
such as an increase in revenue. Prior to completing an acquisition, however, it
is difficult to determine if such benefits can actually be realized.
Accordingly, there is a risk that an acquired company may not achieve an
increase in revenue or

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<PAGE>

other benefits for Keane. In addition, an acquisition may result in unexpected
costs and expenses. Any of these events could have a material adverse effect on
Keane's business, financial condition, and results of operations.

The process of integrating acquired companies into Keane's existing business may
also result in unforeseen difficulties.  Unforeseen operating difficulties may
absorb significant management attention, which Keane might otherwise devote to
its existing business.  Also, the process may require significant financial
resources that Keane might otherwise allocate to other activities, including the
ongoing development or expansion of Keane's existing operations.  Finally,
future acquisition could result in Keane having to incur additional debt and/or
contingent liabilities.  All of these possibilities might have a material
adverse effect on Keane's business, financial condition, and result of
operations.

DEPENDENCE ON PERSONNEL.  Keane 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.  Keane may not succeed in attracting and retaining the personnel
necessary to develop its business.  If Keane does not, its business, financial
condition and result of operations could be materially adversely affected.

HIGHLY COMPETITIVE MARKET.  The market for Keane's services is highly
competitive.  The technology for custom software services can change rapidly.
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 larger and have greater technical,
financial and marketing resources and greater name recognition in the markets
they serve than does Keane.  In addition, clients may elect to increase their
internal information systems resources to satisfy their custom software
development needs.

Keane believes that in order to compete successfully in the software services
industry it must be able 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 larger in the healthcare market and have greater financial resources
than Keane.  Keane believes that significant competitive factors in the
healthcare software systems market include size and demonstrated ability to
provide service to targeted healthcare markets.

Keane may not be able to compete successfully against current or future
competitors.  In addition, competitive pressures faced by Keane may materially
adversely affect its business, financial condition, and results of operations.

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<PAGE>

INTERNATIONAL OPERATIONS.  In August 1998, Keane commenced operations in the
United Kingdom with its acquisition of Icom Systems Ltd, now known as Keane
Limited.  These operations were expanded with Keane's acquisition of Parallax
Solutions Ltd. in May 1999.  Keane's international operations are subject to
political and economic uncertainties, currency exchange rate fluctuations,
foreign exchange restrictions, and changes in taxation and other difficulties in
managing operations overseas.  Keane may not be successful in its international
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.

Quantitative and Qualitative Disclosures about Market Risks.  Market risks were
reported in the Company's Annual Report on Form 10-K for the year ended December
31, 1999.  There have been no material changes in these risks since the end of
the year.

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KEANE, INC. AND SUBSIDIARIES

                          PART II - OTHER INFORMATION


Item 1.   Legal Proceedings

     (a)  On September 25, 2000, the U.S. Equal Employment Opportunity
          Commission ("EEOC") commenced a civil action against Keane, Inc. in
          the United States District Court for the District of Massachusetts
          alleging that the Company discriminated against former employee
          Michael Randolph and other unspecified "similarly-situated
          individuals" by acts of racial harassment, retaliation and
          constructive discharge.  The EEOC has not specified the amount of
          damages it is seeking.  An Answer to the Complaint is not required to
          be filed until November 28, 2000.  Discovery in the case will commence
          shortly thereafter.


Item 5.   Other Information.

     The Company announced on October 25, 2000 that its Board of Directors has
authorized the Company to repurchase an additional one million shares of its
Common Stock during the 12-month period ending July 25, 2001. The timing and
amount of shares repurchased will be determined by the Company's management
based on its evaluation of market and economic conditions. The Company expects
to use any shares repurchased for its stock plans, employee stock purchase and
stock benefit plans, and other general corporate purposes.

Item 6.   Exhibits and Reports on Form 8-K

     (a)  None

     (b)  Reports on Form 8-K.  The Registrant filed no Current Reports on Form
          8-K during the quarter ended September 30, 2000.

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                                   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 13, 2000          /s/ Brian T. Keane
Date __________________________    ___________________________________
                                    Brian T. Keane
                                    President and Chief Executive Officer
                                    (Principal Executive Officer)



        November 13, 2000          /s/ John J. Leahy
Date __________________________    ___________________________________
                                    John J. Leahy
                                    Senior Vice President, Finance
                                    (Principal Financial and
                                    Accounting Officer)

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