<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 JUNE 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 June 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
65,737,439 and 287,613 shares, respectively. The Company declared a 2 for 1
stock split on July 24, 1997, in the form of a stock dividend that will be
distributed on or about August 29,1997 to shareholders of record as of August
14, 1997. The Company previously declared a 2 for 1 stock split on October 29,
1996 that was distributed on November 29, 1996 to shareholders of record as of
November 14, 1996. Both splits have been reflected in the number of Common
Shares outstanding.

                                    1 of 14
<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 six months ended 
   June 30, 1997 and 1996..................................................................   3
 
Consolidated Balance Sheets as of June 30, 1997 and December 31, 1996......................   4
 
Consolidated Statements of Cash Flows for the six months ended June 30, 1997 and 1996......   5
 
Notes to Unaudited Financial Statements....................................................   6
 
Management's Discussion and Analysis of Financial Condition and Results of Operations......   8
 
Part II - Other Information................................................................  12
 
Signature Page.............................................................................  14
</TABLE>

                                       2
<PAGE>
 
KEANE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
 
                                                                          (IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
                                                                     THREE MONTHS ENDED               SIX MONTHS ENDED
                                                                          JUNE 30                          JUNE 30
                                                                      1997       1996                  1997       1996

<S>                                                                 <C>        <C>                   <C>        <C>
Total revenues                                                       $151,966   $113,075              $293,076    $218,836

  Salaries, wages and other direct costs                               99,586     75,032               193,094     145,511
  Selling, general and administrative expenses                         29,867     24,120                57,415      47,278
  Amortization of goodwill and other intangible assets                  3,509      3,120                 7,018       6,258
      
    Operating income                                                   19,004     10,803                35,549      19,789
 
Investment income                                                         893        567                 1,816       1,098
Interest expense                                                           50        117                   100         213
Other expenses, net                                                       373        144                   515         289
 
    Income before income taxes                                         19,474     11,109                36,750      20,385   
                                                                                                              
Provision for income taxes                                              8,374      4,666                15,802       8,562
                                                                                                              
     Net income                                                      $ 11,100   $  6,443              $ 20,948    $ 11,823
                                                                                                              
*Net income per share                                                    $.16       $.10                  $.31        $.18
                                                                                                              
*Weighted average shares outstanding                                   67,506     66,537                67,327      66,110
 
</TABLE> 

*Adjusted to reflect the Company's two for one stock split in the form of a
 dividend to be distributed on August 29, 1997 to shareholders of record as of
 August 14, 1997, as well as a two for one stock split which occurred in
 November 1996.
 
   The accompanying notes are an integral part of the consolidated financial
                                  statements.
 

                                       3
<PAGE>
 
KEANE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                                        (IN THOUSANDS)
                                                                           JUNE 30, 1997        DECEMBER 31, 1996
<S>                                                                        <C>                  <C>
Assets
Current:
    Cash and cash equivalents                                                $ 16,204                 $ 38,837 
    Investments                                                                45,678                   30,242
    Accounts receivable, net
       Trade                                                                  130,785                   94,773
       Other                                                                      866                    2,447
    Prepaid expenses and other current assets                                   3,533                    5,536
                                                                             --------                 --------
               Total current assets                                           197,066                  171,835
    Property and equipment, net                                                12,917                   10,658
    Intangible assets, net                                                     39,797                   46,815
    Other assets                                                                7,648                    5,906
                                                                             --------                 --------
                                                                             $257,428                 $235,214
                                                                             ========                 ========
Liabilities
Current:
    Accounts payable                                                           10,011                    9,825
    Accrued compensation                                                       12,683                   11,036
    Accrued expenses and other liabilities                                      8,561                    5,454
    Notes payable                                                               2,997                    3,191
    Income taxes payable                                                        3,149                    5,677
    Capital lease obligations                                                     197                      236
                                                                             --------                 --------
          Total current liabilities                                            37,598                   35,419
     Notes payable                                                                ---                    2,807
     Long-term portion of capital lease obligations                               272                      358
 
Stockholders' Equity
     Preferred Stock                                                              ---                      ---
     Common Stock                                                               6,604                    6,572
     Class B Common Stock                                                          29                       29
     Additional paid-in capital                                                94,631                   92,647
     Cumulative translation adjustment                                           (82)                     (46)
     Retained earnings                                                        120,789                   99,841
     Less treasury stock                                                      (2,413)                  (2,413)
                                                                             --------                 --------
          Total stockholders' equity                                          219,558                  196,630
                                                                             --------                 --------
                                                                             $257,428                 $235,214
                                                                             ========                 ========
</TABLE> 
   The accompanying notes are an integral part of the consolidated financial
                                  statements.

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

<TABLE> 
<CAPTION> 
                                                                                            (IN THOUSANDS)
                                                                                      SIX  MONTHS ENDED JUNE 30,
                                                                                         1997            1996
<S>                                                                                <C>              <C>   
CASH FLOWS FROM OPERATING ACTIVITIES:

Net income                                                                           $  20,948         $ 11,823
Adjustments to reconcile net income to net cash provided by (used for)
 operating activities
       Depreciation and amortization                                                    10,233            9,550
       Accrued interest on long term debt                                                   99              212
       Deferred income taxes                                                              (192)            (852)
       Provision for doubtful accounts                                                     959            1,276
       Loss on disposal of fixed assets                                                     (1)              25
     Changes in assets and liabilities, net of acquisitions:
       (Increase) in accounts receivable                                               (34,563)         (18,473)
       (Increase) decrease in prepaid  expenses and other assets                           452             (804)
       Increase (decrease) in income taxes payable                                      (2,528)             363
       Increase (decrease) in accounts payable,                                          3,735           (2,074)
       accrued expenses, and other current liabilities                                   -----            -----
                                                                                     ---------         --------
     NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES                                 (858)           1,046
      
CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchase of investments                                                           (25,994)         (10,133)
     Sale of investments                                                                10,559            4,233
     Purchase of property and equipment                                                 (5,538)          (2,306)
     Proceeds from sale of assets                                                            9               13
     Payment for acquisitions                                                            -----             (274)
     Proceeds from sale of business unit                                                   400            -----
                                                                                     ---------         --------
     NET CASH USED FOR INVESTING ACTIVITIES                                            (20,564)          (8,467)
      
CASH FLOWS FROM FINANCING ACTIVITIES:
     Payments under long term-debt                                                      (3,226)          (2,619)
     Proceeds from issuance of common stock                                              2,015            2,404
                                                                                     ---------         --------
     NET CASH USED FOR FINANCING ACTIVITIES                                             (1,211)            (215)
                                                                                     ---------         --------
 
Net  decrease in cash and cash equivalents                                             (22,633)          (7,636)
Cash and cash equivalents, beginning of period                                          38,837           21,913
                                                                                     ---------         --------
Cash and cash equivalents at end of period                                             $16,204         $ 14,277
                                                                                     =========         ========
 
</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 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.

          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 which was distributed on November 29, 1996 to
          shareholders of record as of November 14, 1996.  Additionally, the
          Company declared a 2 for 1 stock split on July 24, 1997 to be
          distributed on or about August 29, 1997 to shareholders of record on
          August 14, 1997.  All Common shares and per share amounts included in
          these financial statements are given retroactive effect to the extent
          required for these stock splits.
 
Note 2.   Computation of earnings per share for quarters ending June 30, 1997
          and 1996.

<TABLE> 
<CAPTION> 
                           
                                                                            1997            1996
<S>                                                                   <C>            <C> 
          Primary
          Average shares outstanding
               Common                                                      65,686          65,264
               Class B Common                                                 288             288
          Net effect of dilutive options-based on the treasury
               stock method using average market price
               Common Stock                                                 1,532             985
                    Total                                                  67,506          66,537
          Net income                                                      $11,100          $6,443
 
          Per share amount                                                   $.16            $.10
 
</TABLE>

                                       6
<PAGE>
 
KEANE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
  
                                             1997       1996
<S>                                       <C>       <C>
          Fully Diluted
          Average Shares outstanding
               Common                       65,686     65,264
               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                  1,576        985
                    Total                   67,550     66,537
 
          Net income                      $ 11,100  $   6,443
          Per share amount                    $.16       $.10
 
 
Note 3.  Intangible assets consist of      6/30/97   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                49,978     42,960
                                          --------  ---------
                                          $ 39,797  $  46,815
                                          ========  =========
 
</TABLE>

                                       7
<PAGE>
 
KEANE, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

The 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 second quarter of 1997 were $152.0 million, a
34.4% increase over the same period last year.  Revenues for the first six
months of 1997 were $293.1 million, an 33.9% increase over the same period last
year.  The increase in revenues is primarily due to Keane's Year 2000 compliance
and outsourcing services.

Salaries, wages and other direct costs for the second quarter of 1997 were $99.6
million, or 65.5% of revenues, compared to $75.0 million, or 66.4% of revenues,
during the same period last year. Salaries, wages and other direct costs for the
first six months of 1997 were $193.1 million, or 65.9% of revenues, compared to
$145.5 million, or 66.5% of revenues, during the same period last year.  This
percentage improvement is primarily attributable to the change of revenue mix in
which lower margin supplemental staffing business as a percentage of the
Company's total revenues has decreased and been replaced by higher margin
project and outsourcing business.

Selling, general and administrative expenses (SG&A) for the second quarter of
1997 were $29.9 million, or 19.7% of revenues, compared to $24.1 million, or
21.3% of revenues, for the same period last year.  Year-to-date SG&A expenses
were $57.4 million, or 19.6% of revenues, compared to $47.3 million, or 21.6% of
revenues, for the same period last year. The percentage decrease in SG&A is
attributable to the increase in revenues that did not require a proportionate
increase in cost.

Amortization of goodwill and capitalized acquisitions costs for the second
quarter of 1997 totaled $3.5 million, or 2.3% of revenues, compared to $3.1
million, or 2.8% of revenues, for the same period last year.  Amortization of
goodwill and capitalized acquisition costs for the first six months of 1997 were
$7.0 million, or 2.4% of revenues, compared to $6.3 million, or 2.9% of
revenues, for the same period last year.

                                       8
<PAGE>
 
Interest and other related expenses for the second quarter of 1997 were
$423,000, compared to $261,000 for the same period last year.  Interest and
other related expenses for the first six months of 1997 were $615,000, compared
to $502,000 for the same period last year.  The Company recognized investment
income of $893,000 in the second quarter of 1997 and $1,816,000 year to date,
compared to $567,000 and $1,098,000, respectively, for the same periods 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 second quarter of 1997 was $19.5 million,
or 12.8% of revenues, compared to $11.1 million, or 9.8% of revenues, for the
same period last year.  Pre-tax income year-to-date was $36.7 million, or 12.5%
of revenues, compared to $20.4 million, or 9.3% of revenues, for the same period
last year.

The Company's effective tax rate for the second quarter and first six months of
1997 was 43%, as compared to 42% for the corresponding periods last year.  The
increase in the tax rate was due to an increase in state income taxes.

Net Income
----------

Net income and earnings per share for the second quarter of 1997 were $11.1
million and $.16 per share, respectively, compared to $6.4 million and $.10 per
share, respectively, for the same period last year.  Net income and earnings per
share for the six months ended June 30, 1997 were $20.9 million and $.31 per
share, respectively, compared to $11.8 million and $.18 per share, respectively,
for the same period 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 the adoption of this statement on its consolidated financial statements and 
related disclosures.

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

The Company ended the second quarter of 1997 with cash, cash equivalents and
marketable securities totaling approximately $61.8 million, down from the year
end balance of $69.1 million. The decrease is primarily attributable to the
increase in accounts receivable, due to the Company's revenue growth. The
Company's debt, including accrued interest, at the end of the second quarter was
$3.2 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, cash
equivalents, marketable securities, cash flows from operations, and its current
available line of credit will

                                       9
<PAGE>
 
be sufficient to meet its current working capital requirements, which may
include acquisitions during at least the next 12 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. 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.

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 increase 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

                                       10
<PAGE>
 
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
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 period to
period in the future.

                                       11
<PAGE>
 
KEANE, INC. AND SUBSIDIARIES

                          PART II - OTHER INFORMATION
--------------------------------------------------------------------------------


Item 4. Submission of Matters to a Vote of Security Holders

     The Annual Meeting of Stockholders of the Company was held on May 28, 1997.
     The Stockholders approved the election of the five nominees named below,
     and ratified the selection of Coopers & Lybrand, L.L.P. as the Company's
     independent accountants for 1997.  Set forth below is the number of votes
     cast for, against or withheld, as well as the number of abstentions and
     Broker non-votes as to each such matter, including a separate tabulation
     with respect to each nominee for director:

     Proposal #1 - To fix the number of directors at five and to elect the
     following persons to serve as directors:
<TABLE>
<CAPTION>
                                                           BROKER
                            FOR      AGAINST     ABSTAIN  NON-VOTES
<S>                      <C>         <C>      <C>      <C>
 
     John F. Keane       32,467,619   45,141        0          0
     John F. Rockhart    32,467,940   44,820        0          0
     Robert Shafto       32,463,150   49,610        0          0
     Winston Hindle      32,467,940   44,820        0          0
     Philip Harkins      32,468,170   44,590        0          0
</TABLE>

     Proposal #2 - To approve an amendment to the Company's Articles of
     Organization increasing the number of shares of Common Stock which the
     Company is authorized to issue from 50,000,000 to 100,000,000;
<TABLE>
<CAPTION>
                                                             BROKER
                          FOR         AGAINST    ABSTAIN    NON-VOTES
<S>                    <C>         <C>         <C>         <C> 
 
                        30,807,158   1,652,979    52,623        0
 
     Proposal #3 - To approve an amendment to the Company's 1992 Stock Option
                   Plan;
 
                                                             BROKER
                          FOR         AGAINST    ABSTAIN    NON-VOTES
 <S>                   <C>         <C>         <C>         <C> 

                        28,469,621   3,987,771    55,368        0

</TABLE> 
 

                                       12
<PAGE>
 
     Proposal #4 - To approve amendments to the Company's 1992 Employee Stock
     Purchase Plan:

<TABLE> 
<CAPTION> 
                                                             BROKER
                          FOR         AGAINST    ABSTAIN    NON-VOTES
 <S>                   <C>         <C>         <C>         <C> 
                        31,086,936   265,981      54,062      1,105,781
 
</TABLE> 
     Proposal #5 - To ratify the selection of Coopers & Lybrand, L.L.P. as the
     Company's independent accountants for 1997:
<TABLE> 
<CAPTION> 

                                                             BROKER
                          FOR         AGAINST    ABSTAIN    NON-VOTES
 <S>                   <C>         <C>         <C>         <C> 
                        32,421,499   43,347       47,914         0
</TABLE>

Item 5.  Other Information

The Company's Board of Directors authorized a two for one stock split in the
form of a stock dividend, wherein one share of Common Stock will be issued to
shareholders of record for each share of Common Stock and Class B Common Stock
outstanding as of August 14, 1997. It is currently anticipated that the date of
distribution will be on or about August 29, 1997.

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 June 30, 1997.

                                       13
<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)

     August 11 , 1997                    /s/  John F. Keane
Date __________________________      ___________________________________
                                              John F. Keane
                                              President

     August 11, 1997                     /s/  Wallace A. Cataldo
Date __________________________      ___________________________________
                                              Wallace A. Cataldo
                                              Vice President, Finance

                                       14