<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 MARCH 31, 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 March 31, 1997, the number of issued and outstanding shares of Common
Stock (excluding 305,615 shares held in treasury) and Class B Common stock are
32,618,686 and 287,613 shares, respectively.  The Company declared a 2 for 1
stock split on October 24, 1996, in the form of a stock dividend that was
distributed to shareholders of record as of November 14, 1996, which has been
reflected in the number of Common Shares outstanding.

                                  Page 1 of 12
<PAGE>
 
Keane, Inc. and Subsidiaries
TABLE OF CONTENTS


Part I - Financial Information
<TABLE>
<S>                                                                                      <C> 
Consolidated Statements of Income for the three months ended March 31, 1997
and 1996...............................................................................   3
 
Consolidated Balance Sheets as of March 31, 1997 and December 31, 1996.................   4
 
Consolidated Statements of Cash Flows for the three months ended March 31, 1997
and 1996...............................................................................   5
 
Notes to Financial Statements..........................................................   6
 
Management's Discussion and Analysis of Financial Condition and Results of Operations..   8
 
Part II - Other Information............................................................  11
 
Signature Page.........................................................................  12
</TABLE>

                                  Page 2 of 12
<PAGE>
 
KEANE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
 
                                                                    (IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
                                                                          THREE MONTHS ENDED MARCH 31,
                                                                    1997                                1996
<S>                                                              <C>                                <C>
Total revenues                                                    $141,110                             $105,761
 
Salaries, wages and other direct costs                              93,508                               70,479
Selling, general and administrative expenses                        27,548                               23,158
Amortization of goodwill and other intangible assets                 3,509                                3,138
                                                                  --------                             --------
     
     Operating income                                               16,545                                8,986
 
Investment income                                                      923                                  531
Interest expense                                                        50                                   96
Other expenses, net                                                    142                                  145
                                                                  --------                             --------
 
     Income before income taxes                                     17,276                                9,276
 
Provision for income taxes                                           7,428                                3,896
                                                                  --------                             --------
 
     Net income                                                   $  9,848                             $  5,380
                                                                  ========                             ========
 
*Net income per share                                                 $.29                                 $.16
                                                                  ========                             ========
 
*Weighted average common and common                                 33,574                               32,842
 share equivalents outstanding                                    ========                             ========

</TABLE> 
 
*Adjust to reflect the Company's two for one stock split in the form of a
 dividend distributed on November 29, 1996 to shareholders of record as of
 November 14, 1996
 
The accompanying notes are an integral part of the consolidated financial
statements.

                                  Page 3 of 12
<PAGE>
 
KEANE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS 
<TABLE> 
<CAPTION> 
                                                                         (IN THOUSANDS)
                                                        MARCH 31, 1997                    DECEMBER 31, 1996
<S>                                                       <C>                                <C>   
Assets
Current:
   Cash and cash equivalents                              $ 17,967                             $ 38,837
   Investments                                              40,162                               30,242
   Accounts receivable, net                               
     Trade                                                 118,817                               94,773
     Other                                                     911                                2,447
   Prepaid expenses and other current assets                 3,127                                5,536
                                                          --------                             --------
       Total current assets                                180,984                              171,835
                                                          
   Property and equipment, net                              10,634                               10,658
   Intangible assets, net                                   43,306                               46,815
   Other assets, net                                         6,769                                5,906
                                                          --------                             --------
                                                          $241,693                             $235,214
                                                          ========                             ========
Liabilities                                               
Current:                                                  
   Accounts payable                                       $  7,811                             $  9,825
   Accrued compensation                                      5,026                               11,036
   Accrued expenses and other                                8,491                                5,454
    liabilities                                           
   Notes payable                                             2,947                                3,191
   Income taxes payable                                      9,672                                5,677
   Capital lease obligations                                   111                                  236
                                                          --------                             --------
       Total current liabilities                            34,058                               35,419
                                                          
   Notes payable                                             -----                                2,807
   Long-term portion of capital lease                          400                                  358
    obligations                                           
                                                          
Stockholders' Equity                                      
   Common Stock                                              3,292                                3,287
   Class B Common Stock                                         29                                   29
   Additional paid-in capital                               96,734                               95,932
   Cumulative translation adjustment                           (96)                                 (46)
   Retained earnings                                       109,689                               99,841
   Less treasury stock                                      (2,413)                              (2,413)
                                                          --------                             --------
       Total stockholders' equity                          207,235                              196,630
                                                          --------                             --------
                                                          $241,693                             $235,214
                                                          ========                             ========
 
</TABLE> 
The accompanying notes are an integral part of the consolidated financial
statements.

                                  Page 4 of 12
<PAGE>
 
KEANE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS           

<TABLE> 
<CAPTION> 
 
                                                                                   (IN THOUSANDS)
                                                                            THREE  MONTHS ENDED MARCH 31,
                                                                     1997                                 1996
<S>                                                              <C>                                   <C> 
CASH FLOWS FROM OPERATING ACTIVITIES:                                 
Net Income                                                        $  9,848                             $  5,380
Adjustment to reconcile net income to
 net cash provided by operating
 activities:
   Depreciation and amortization                                     5,028                                4,736
   Deferred income taxes                                              (192)                                 140
   Provision for doubtful accounts                                     691                                  789
   Loss (gain) on the sale of property and equipment                   (37)                                   5
   Accrued interest on long-term debt                                   49                                   95
Changes in assets and liabilities, net of acquisitions:
   (Increase) in accounts receivable                               (22,377)                             (11,787)
   (Increase) decrease in prepaid
    expenses and other assets                                        1,737                                 (346)
   (Decrease) in accounts payable and
    accrued expenses and other liabilities                          (6,193)                              (6,484)
   Increase in income taxes payable                                  3,994                                3,151
                                                                  --------                             --------
   NET CASH USED FOR OPERATING ACTIVITIES                           (7,452)                              (4,321)
                                                                  --------                             --------
 
CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchase of investments                                         (12,547)                              (4,275)
   Sale of investments                                               2,602                                2,054
   Purchase of property and equipment                               (1,500)                              (1,147)
   Proceeds from the sale of property                                    1                                   27
    and equipment
   Proceeds from sale of business units                                400                                 ----
   Payments for acquisitions                                          ----                                 (274)
                                                                  --------                             --------
   NET CASH USED FOR INVESTING ACTIVITIES                          (11,044)                              (3,615)
                                                                  --------                             --------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Payments under long-term debt                                    (3,100)                              (2,374)
   Principal payments under capital lease obligations                  (81)                                (106)
   Proceeds from issuance of common stock                              807                                  704
                                                                  --------                             --------
   NET CASH USED FOR FINANCING ACTIVITIES                           (2,374)                              (1,776)
                                                                  --------                             --------
   Net (decrease) in cash and cash equivalents                     (20,870)                              (9,712)
   Cash and cash equivalents at beginning of period                 38,837                               21,913
                                                                  --------                             --------
   Cash and cash equivalents at end of period                     $ 17,967                             $ 12,201
                                                                  ========                             ========
 
</TABLE> 
The accompanying notes are an integral part of the consolidated financial 
statements.

                                  Page 5 of 12
<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 Annual Report on Form 10-K for the year ended December 31,
          1996 ("the Annual Report") and should be read in conjunction with the
          disclosures therein.  All financial figures are in thousands of
          dollars, except per share amounts.

          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 October 24, 1996, the Company declared a 2 for 1 stock split in the
          form of a dividend distributed on November 29, 1996 to shareholders of
          record as of November 14, 1996.  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 March 31, 1997
          and 1996.
<TABLE>
<CAPTION>
 
                                                    1997     1996
<S>                                              <C>       <C>
       Primary
       Average shares outstanding
          Common                                   32,605   32,162
          Class B Common                              288      288
       Net effect of dilutive options-based 
        on the treasury stock method using 
        average market price
          Common Stock                                681      392
                                                  -------  -------
              Total                                33,574   32,842
                                                  =======  =======
       Net income                                 $ 9,848  $ 5,380
 
       Per share amount                              $.29     $.16
</TABLE>

                                  Page 6 of 12
<PAGE>
 
KEANE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
 
                                            1997      1996
<S>                                       <C>       <C>
       Fully Diluted
       Average Shares outstanding
          Common                            32,605     32,162
          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                         685        480
                                          --------  ---------
              Total                         33,578     32,930
                                          ========  =========
       Net income                         $  9,848  $   5,380
 
       Per share amount                       $.29       $.16
 
 
Note 3.  Intangible assets consist of      3/31/97   12/31/96
          the following:
 
          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     46,469     42,960
                                          --------  ---------
 
                                          $ 43,306  $  46,815
                                          ========  =========
 
</TABLE>

                                  Page 7 of 12
<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 revenue for the First Quarter of 1997 was $141.1 million, a 33.4%
increase over the First Quarter last year.  The increase in revenue was
primarily attributable to a continued strong economy in which the demand for the
Company's strategic service offerings continued to grow in addition to continued
growth in demand for the Company's supplemental staffing services.  The
Company's strategic service offerings include large software development
projects, including Year 2000 compliance projects, and longer-term application
and help desk outsourcing.

Salaries, wages and other direct costs for the First Quarter of 1997 were $93.5
million, or 66.3% of revenue, compared to $70.5 million, or 66.6% of revenue,
for the First Quarter of 1996, for a 0.3% decrease as a percentage of revenue.
This decrease as a percentage of revenue is primarily attributable to an
increase in higher margin obtained from our strategic services business.  This
business represented nearly half of the Company's revenues in the First Quarter
of 1997 compared to 36% for the First Quarter last year.

Selling, General & Administrative ("SG&A") expenses for the First Quarter of
1997 were $27.5 million, or 19.5% of revenue, compared to $23.2 million, or
21.9% of revenue, for the First Quarter last year.  The decrease in SG&A as a
percentage of revenue was primarily attributable to the economies of scale
associated with increased volume of revenue that did not require a proportionate
increase in SG&A and to a large extent to an increase in the number of large
contracts in which the Company is engaged, which allows associated overhead
services to be delivered more cost effectively.

Amortization of goodwill and other intangible assets for the First Quarter was
$3.5 million, or 2.5% of revenue, compared to $3.1 million, or 3.0% of revenue
in the first quarter of 1996.

Interest and other related investment income totaled $0.9 million for the First
Quarter of 1997, compared to $0.5 million the same period last year. Interest
and other related expenses for the First Quarter of each of 1997 and 1996
totaled $0.2 million.

Pre-tax income for the First Quarter of 1997 was $17.3 million, or 12.2% of
revenue, up 86.2% from pre-tax income of $9.3 million, or 8.8% of revenue, in
the First Quarter of 1996.

The Company's effective tax rate for the First Quarter of 1997 was 43%, compared
to an effective tax rate of 42% for the same period last year.  The higher
effective tax rate is a result of an increase in the Company's state income tax
rate.

Net income and earnings per share for the First Quarter of 1997 were $9.8
million and $ .29, respectively, compared to $5.4 million and $ .16 for the
First Quarter last year.

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
adoption of this statement on its consolidated financial statements and related
disclosures.
                                  Page 8 of 12
<PAGE>
 
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

The Company ended the First Quarter of 1997 with cash equivalents and short-term
investments totaling approximately $58.1 million, down from the year end balance
of $69.1 million.  The decrease is primarily attributable to the increase in
accounts receivable and the purchase of investments.  The Company's debt,
including accrued interest at the end of the First Quarter was $3.5 million,
which consists 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.

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

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.  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 and
requirements of client engagements, employee utilization rates, changes in the
rates the Company is able to charge its 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.

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
depends on many factors, including the successful identification and acquisition
of businesses and management's ability to integrate and operate the new
businesses effectively. 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 the various
businesses 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 

                                  Page 9 of 12
<PAGE>
 
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
bases 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.

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.

                                 Page 10 of 12
<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 registrant filed no reports on Form
                  8-K during the quarter ended March 31, 1997.

 


















--------------------------------------------------------------------------------

 

                                 Page 11 of 12
<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)


Date March 15, 1997                  \s\ John F. Keane
     --------------                  ---------------------------------------
                                           John F. Keane
                                           President


Date March 15, 1997                  \s\ Wallace A. Cataldo
     --------------                  ---------------------------------------
                                           Wallace A. Cataldo
                                           Vice President, Finance
                                           (Principal Financial and Accounting
                                           Officer)

                                 Page 12 of 12