<PAGE>

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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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

                                   FORM 10-Q

[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
    Act of 1934

   For the quarterly period ended March 31, 2001 or

[_] Transition Report Pursuant to Section 13 or 15(d) of the Securities
    Exchange Act of 1934

                        Commission File Number 000-21755

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

                           iGATE CAPITAL CORPORATION
             (Exact name of registrant as specified in its charter)

<TABLE>
<CAPTION>
          PENNSYLVANIA                 25-1802235
<S>                                <C>
  (State or other jurisdiction      (I.R.S. Employer
of incorporation or organization)  Identification No.)

   10 Foster Plaza, 5th Floor
       680 Andersen Drive
         Pittsburgh, PA                   15220
 (Address of Principal Offices)        (Zip Code)
</TABLE>

       Registrant's telephone number, including area code: (412) 503-4450

   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  [_]

   The number of shares of the registrant's Common Stock, par value $0.01 per
share, outstanding as of April 30, 2001 was 51,235,814.

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

                           iGATE CAPITAL CORPORATION

                         QUARTERLY REPORT ON FORM 10-Q
                      FOR THE QUARTER ENDED MARCH 31, 2001

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
 <C>      <S>                                                               <C>
 Part I.  Financial Information..........................................     2

  Item 1. Condensed Consolidated Financial Statements:

      (a) Unaudited Condensed Consolidated Statements of Operations for
          the Three-Month Periods Ended March 31, 2001 and 2000..........     2

      (b) Condensed Consolidated Balance Sheets as of March 31, 2001
          (unaudited) and December 31, 2000..............................     3

      (c) Unaudited Consolidated Statement of Shareholders' Equity and
          Comprehensive Income for the Three-Month Period Ended March 31,
          2001...........................................................     4

      (d) Unaudited Condensed Consolidated Statements of Cash Flows for
          the Three-Month Periods Ended March 31, 2001 and 2000..........     5

      (e) Notes to Unaudited Condensed Consolidated Financial
          Statements.....................................................     6

      (f) Report of Independent Public Accountants.......................    13

  Item 2. Management's Discussion and Analysis of Financial Condition and
          Results of Operations..........................................    14

  Item 3. Quantitative and Qualitative Disclosure About Market Risk......    20

 Part II. Other Information..............................................    20

  Item 1. Legal Proceedings..............................................    20

  Item 6. Exhibits and Reports on Form 8-K...............................    20

          Signatures.....................................................    21
</TABLE>

<PAGE>

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(a)
                           iGATE CAPITAL CORPORATION

                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                 (Dollars in thousands, except per share data)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                               Three Months
                                                                   Ended
                                                                 March 31,
                                                             ------------------
                                                               2001      2000
                                                             --------  --------
<S>                                                          <C>       <C>
Revenues...................................................  $119,468  $110,091
Cost of revenues...........................................    75,121    75,473
                                                             --------  --------
  Gross profit.............................................    44,347    34,618
Selling, general and administrative........................    45,807    39,355
                                                             --------  --------
  Income (loss) from operations............................    (1,460)   (4,737)
Other income (expense), net................................    (3,525)     (520)
Equity in losses of affiliated companies...................    (4,119)   (1,660)
Minority interest..........................................      (471)      221
Gain on sale of investment in unconsolidated affiliate.....    16,706       --
Loss on impairment of investments..........................    (5,500)      --
                                                             --------  --------
  Income (loss) before income taxes........................     1,631    (6,696)
Income tax provision (benefit).............................       651    (2,678)
                                                             --------  --------
  Income (loss) before cumulative effect of change in
   accounting principle....................................       980    (4,018)
Cumulative effect of change in accounting principle, net of
 tax of $592...............................................       887       --
                                                             --------  --------
  Net income (loss)........................................  $  1,867  $ (4,018)
                                                             ========  ========
Net income (loss) per common share, basic:
  Income (loss) before cumulative effect of change in
   accounting principle....................................  $   0.02  $  (0.08)
  Cumulative effect of change in accounting principle, net
   of tax..................................................      0.02       --
                                                             --------  --------
Net income (loss), basic...................................  $   0.04  $  (0.08)
                                                             ========  ========
Net income (loss) per common share, diluted:
  Income (loss) before cumulative effect of change in
   accounting principle....................................  $   0.02  $  (0.08)
  Cumulative effect of change in accounting principle, net
   of tax..................................................      0.02       --
                                                             --------  --------
Net income (loss) diluted..................................  $   0.04  $  (0.08)
                                                             ========  ========
</TABLE>

  The accompanying notes are an integral part of these Condensed Consolidated
                             Financial Statements.

                                       2
<PAGE>

(b)
                           iGATE CAPITAL CORPORATION

                     CONDENSED CONSOLIDATED BALANCE SHEETS
                (Dollars in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                         March 31,  December 31,
                                                           2001         2000
                                                        ----------- ------------
                                                        (Unaudited)  (Audited*)
<S>                                                     <C>         <C>
                        ASSETS
Current assets:
  Cash and cash equivalents............................  $ 23,844     $ 22,773
  Investments..........................................    14,150       17,660
  Restricted investments...............................    25,500       25,000
  Accounts receivable, net.............................   108,033      118,858
  Prepaid and other assets.............................    28,104       36,318
  Deferred income taxes................................     7,958        6,006
                                                         --------     --------
    Total current assets...............................   207,589      226,615
Investments in unconsolidated affiliates...............    55,192       61,120
Equipment and leasehold improvements, net..............    24,832       23,678
Intangible assets, net.................................    56,139       52,738
                                                         --------     --------
    Total assets.......................................  $343,752     $364,151
                                                         ========     ========
         LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Revolving credit facility............................  $ 28,695     $ 44,695
  Accounts payable.....................................    15,717       17,724
  Accrued payroll and related costs....................    31,373       29,646
  Other accrued liabilities............................    18,081       14,230
                                                         --------     --------
    Total current liabilities..........................    93,866      106,295
  Convertible promissory note..........................    20,000       20,000
  Other long-term liabilities..........................     1,664          314
  Deferred income taxes................................    16,080       20,021
  Minority interest....................................     7,555        6,934
                                                         --------     --------
    Total liabilities..................................   139,165      153,564
                                                         --------     --------
Shareholders' equity:
  Preferred Stock, without par value...................       --           --
  Common Stock, par value $0.01 per share..............       522          522
  Additional paid-in capital...........................   142,706      142,706
  Retained earnings....................................    75,366       73,499
  Common Stock held in treasury, at cost...............   (14,095)     (14,095)
  Accumulated other comprehensive income (loss)........        88        7,955
                                                         --------     --------
    Total shareholders' equity.........................   204,587      210,587
                                                         --------     --------
    Total liabilities and shareholders' equity.........  $343,752     $364,151
                                                         ========     ========
</TABLE>
--------
* Condensed from audited Consolidated Financial Statements.

  The accompanying notes are an integral part of these Condensed Consolidated
                             Financial Statements.

                                       3
<PAGE>

(c)
                           iGATE CAPITAL CORPORATION

    CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME
                             (Dollars in thousands)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                                                  Total
                         Common Stock                                            Accumulated  Shareholders'
                       ---------------- Series A  Additional                        Other      Equity and   Comprehensive
                                   Par  Preferred  Paid-in   Retained Treasury  Comprehensive Comprehensive    Income
                         Shares   Value  Shares    Capital   Earnings  Shares   Income (Loss) Income (Loss)    (Loss)
                       ---------- ----- --------- ---------- -------- --------  ------------- ------------- -------------
<S>                    <C>        <C>   <C>       <C>        <C>      <C>       <C>           <C>           <C>
Balance, December 31,
 2000................  52,107,455 $522       1     $142,706  $73,499  $(14,095)    $7,955       $210,587
Comprehensive income:
 Net unrealized loss
  on investments.....         --   --      --           --       --        --      (7,429)        (7,429)      $(7,429)
 Currency translation
  adjustment.........         --   --      --           --       --        --        (438)          (438)         (438)
 Net income..........         --   --      --           --     1,867       --         --           1,867         1,867
                       ---------- ----     ---     --------  -------  --------     ------       --------       -------
Balance, March 31,
 2001................  52,107,455 $522       1     $142,706  $75,366  $(14,095)    $   88       $204,587       $(6,000)
                       ========== ====     ===     ========  =======  ========     ======       ========       =======
</TABLE>




  The accompanying notes are an integral part of these Condensed Consolidated
                             Financial Statements.

                                       4
<PAGE>

(d)
                           iGATE CAPITAL CORPORATION

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                               Three Months
                                                                   Ended
                                                                 March 31,
                                                             ------------------
                                                               2001      2000
                                                             --------  --------
<S>                                                          <C>       <C>
Cash Flows From Operating Activities:
Operations:
Net income (loss)..........................................  $  1,867  $ (4,018)
Adjustments to reconcile net income to cash provided by
 operations:
  Depreciation and amortization............................     2,945     2,378
  Gain on sale of investment in unconsolidated affiliate...   (16,706)      --
  Loss on impairment of investments........................     5,500       --
  Allowance for uncollectible accounts.....................       658       590
  Deferred income taxes, net...............................    (5,893)      450
  Equity in losses of affiliated companies.................     4,119     1,660
  Minority interest........................................       471      (221)
Working capital items:
  Accounts receivable and unbilled receivables.............    10,167    (1,268)
  Employee and related party advances......................     2,369      (663)
  Prepaid and other assets.................................     5,845    (9,118)
  Accounts payable.........................................    (2,007)   (1,006)
  Accrued and other current liabilities....................     5,578    (1,870)
                                                             --------  --------
    Net cash flows provided (used) by operating
     activities............................................    14,913   (13,086)
                                                             --------  --------
Cash Flows From Investing Activities:
Additions to equipment and leasehold improvements, net.....    (3,415)   (3,610)
Sales of investments, net of purchases.....................     6,787     8,784
Acquisitions, net of cash acquired.........................       --     (5,375)
Contingent consideration...................................    (2,276)      --
Investments in unconsolidated affiliates...................       --    (34,067)
                                                             --------  --------
    Net cash flows provided (used) by investing
     activities............................................     1,096   (34,268)
                                                             --------  --------
Cash Flows From Financing Activities:
Net borrowings (repayments) on credit facilities...........   (16,000)   33,500
Net proceeds from issuance of promissory note and warrant..     1,500       --
Net proceeds from exercise of stock options................       --     17,604
Other......................................................       --        100
                                                             --------  --------
    Net cash flows provided (used) by financing
     activities............................................   (14,500)   51,204
                                                             --------  --------
Effect of currency translation.............................      (438)      (66)
                                                             --------  --------
Net change in cash and cash equivalents....................     1,071     3,784
Cash and cash equivalents, beginning of period.............    22,773    23,596
                                                             --------  --------
Cash and cash equivalents, end of period...................  $ 23,844  $ 27,380
                                                             ========  ========
</TABLE>

  The accompanying notes are an integral part of these Condensed Consolidated
                             Financial Statements.

                                       5
<PAGE>

(e) NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

   The Unaudited Condensed Consolidated Financial Statements included herein
have been prepared by iGate Capital Corporation (the "Company") in accordance
with generally accepted accounting principles for interim financial information
and Article 10 of Regulation S-X under the Securities Exchange Act of 1934, as
amended. The accompanying Unaudited Condensed Consolidated Financial Statements
as of and for the three months ended March 31, 2001 should be read in
conjunction with the Company's Consolidated Financial Statements (and notes
thereto) included in the Company's Annual Report filed on Form 10-K for the
year ended December 31, 2000, as amended (the "2000 Form 10-K"). Accordingly,
the accompanying Unaudited Condensed Consolidated Financial Statements do not
include all of the information and notes required by accounting principles
generally accepted in the United States of America for complete financial
statements. In the opinion of the Company's management, all adjustments
considered necessary for a fair presentation of the accompanying Unaudited
Condensed Consolidated Financial Statements have been included, and all
adjustments unless otherwise discussed in the Notes to the Unaudited Condensed
Consolidated Financial Statements are of a normal and recurring nature. The
information contained herein is not a comprehensive management overview and
analysis of the financial condition and results of operations of the Company,
but rather updates disclosures made in the 2000 Form 10-K. All significant
intercompany accounts and transactions have been eliminated in consolidation.
Operating results for the three months ended March 31, 2001 are not necessarily
indicative of the results that may be expected for the year ending December 31,
2001.

   The use of accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amount
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.

   Certain reclassifications have been made to the Unaudited Condensed
Consolidated Financial Statements as of and for the three months ended March
31, 2000 to conform to the current period presentation. The Company's Unaudited
Condensed Consolidated Financial Statements have been restated to consolidate
an investment in which the Company had acquired a controlling interest, which
had previously been accounted for under the equity method of accounting. The
Company has also reclassified expenses related to consultants' non-billable
time from cost of revenues to selling, general, and administrative expenses.

2. Change in Accounting Principle

   The Company adopted Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133")
effective January 1, 2001. SFAS 133 establishes accounting and reporting
standards requiring that all derivative instruments (including certain
derivative instruments embedded in other contracts) be recorded on the balance
sheet as either an asset or a liability measured at their fair value. SFAS 133
requires that changes in a derivative's fair value be recognized currently in
earnings unless specific hedge criteria are met.

   The Company uses foreign exchange contracts to reduce its foreign exchange
exposure on certain intercompany debt. In addition, the Company holds warrants
to purchase common stock in a publicly-held company. The adoption of SFAS 133
resulted in the recording of $1.5 million of current assets, and a gain of
$887,000, net of tax, from the cumulative effect of the change in accounting
principle. At March 31, 2001, the Company had net derivative assets of $21,000.
The reduction in the value of net derivative assets from January 1, 2001 to
March 31, 2001 was recorded as other expense on the Consolidated Statement of
Operations.

3. Investments

   The Company accounts for its investments in marketable securities in
accordance with Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities" ("SFAS
115"). The Company has determined that certain of its investments in marketable
securities are to be

                                       6
<PAGE>

classified as available-for-sale and recorded at fair value. These investments
are carried at market value, with the unrealized gains or losses, net of tax,
reported as a component of comprehensive income in the Consolidated Statement
of Shareholders' Equity and Comprehensive Income. Realized gains or losses on
securities sold are calculated using the specific identification method.

   The Company accounts for investments in businesses in which it owns between
20% and 50% of equity or otherwise acquires management influence using the
equity method of accounting as prescribed by Accounting Principles Board
Opinion No. 18, "The Equity Method of Accounting for Investments in Common
Stock." Investments in which the Company acquires less than a 20% interest, or
in which the Company does not acquire management influence are accounted for
using the cost method of accounting, or, if publicly traded, as available-for-
sale securities. The Company's proportionate share of investment income or
loss in affiliates accounted for under the equity method is recorded as part
of non-operating income.

   There were no dividends declared for either of the three-month periods
ended March 31, 2001 and 2000.

   During the third quarter of 2000, the Company acquired a controlling
interest in Symphoni Interactive, LLC ("Symphoni"). As a result of this step
acquisition, we have restated the Company's operating results and financial
position for the first quarter of 2000 to consolidate Symphoni, with no change
in net income for these periods. The Company's investment in Symphoni had
previously been accounted for under the equity method of accounting.

   On February 28, 2001, the Company sold its approximate 50% interest in
Planning Technologies, Inc. ("PTI") to Red Hat, Inc. ("Red Hat") in exchange
for approximately 3.2 million shares of Red Hat's Common Stock. As part of the
agreement, approximately 10% of the Red Hat shares are held in escrow. From
January through February 28, 2001, the Company recorded its share of PTI's
loss in accordance with equity accounting rules. Upon the closing of the sale,
the Company accounted for its investment in Red Hat Common Stock in accordance
with SFAS 115.

   The Company recorded a gain of approximately $16.7 million pursuant to the
transaction. The Company's portion of the proceeds on the sale was calculated
based upon Red Hat's closing price on February 23, 2001 of $6.4375.

   In March 2001, the Company's subsidiary Highgate Ventures I, LP
("Highgate") recorded losses in its investments in Bluewater Information
Convergence, Inc. ("Bluewater") and Xpede, Inc. ("Xpede"). Highgate owned
926,859 shares of Series A Convertible Preferred Stock of Bluewater with a
cost of $3.0 million, and 800,000 shares of Series B Convertible Preferred
Stock in Xpede with a cost of $2.0 million. In addition, Highgate held a $0.5
million, 10% Convertible Promissory Note from Bluewater that was due to mature
on September 12, 2001. Highgate does not anticipate realizing any value from
these investments, and, accordingly, has recorded losses totaling $5.5 million
on the impairment of its investments in Bluewater and Xpede.

                                       7
<PAGE>

4. Earnings Per Share

   The following table sets forth the computation of basic and diluted earnings
per share (in thousands, except per share data):

<TABLE>
<CAPTION>
                                                           Three Months Ended
                                                                March 31,
                                                           -------------------
                                                             2001      2000
                                                           --------- ---------
<S>                                                        <C>       <C>
Basic earnings (loss) per share:
  Income (loss) before cumulative change in accounting
   principle.............................................. $     980 $  (4,018)
  Cumulative effect of change in accounting principle.....       887       --
                                                           --------- ---------
  Net income (loss).......................................     1,867    (4,018)
                                                           --------- ---------
Divided by:
  Weighted average common shares..........................    51,257    49,950
                                                           --------- ---------
Basic earnings (loss) per share........................... $    0.04 $   (0.08)
                                                           ========= =========
Diluted earnings (loss) per share:
  Income (loss) before cumulative change in accounting
   principle.............................................. $     980 $  (4,018)
  Cumulative effect of change in accounting principle.....       887       --
                                                           --------- ---------
  Net income (loss).......................................     1,867    (4,018)
  Convertible debt expense, net of tax(1).................       188       --
                                                           --------- ---------
  Adjusted net income (loss)..............................     2,055    (4,018)
                                                           --------- ---------
Divided by the sum of:
  Weighted average common shares..........................    51,257    49,950
  Dilutive effect of contingently convertible securities..     1,387       --
                                                           --------- ---------
  Diluted average common shares...........................    52,644    49,950
                                                           --------- ---------
Diluted earnings (loss) per share......................... $    0.04 $   (0.08)
                                                           ========= =========
</TABLE>

(1)  Convertible debt expense relates to a Convertible Debenture Agreement with
     GE Capital Equity Investments, Inc.

   Earnings per share ("EPS") for both periods presented were computed in
accordance with the provisions of Statement of Financial Accounting Standards
No. 128, "Earnings Per Share." 1,387,000 Shares reserved for issuance upon
conversion of a convertible promissory note were excluded from the computation
of diluted EPS for the quarter ended March 31, 2000 because their effect would
be antidilutive. Options to purchase 4,076,000 and 4,740,000 shares of the
Company's Common Stock were excluded from the computation of diluted EPS for
the quarters ended March 31, 2001 and 2000, respectively, because their effect
would be antidilutive. In 2001, the average price of the Company's Common Stock
exceeded the exercise price of the options and in 2000, the Company had a net
loss.

5. Segment Information

   In accordance with Statement of Financial Accounting Standards No. 131,
"Disclosures about Segments of an Enterprise and Related Information,"
management has reevaluated the way the Company is to be managed, beginning in
the third quarter of 2000. As a result, the existing operating units of the
Company were recast into seven reportable operating segments, which have been
defined by management based primarily on the scope of services offered by each
segment. Accordingly, the segment information for the first quarter of 2000 has
been restated for comparative purposes.

                                       8
<PAGE>

   The Company's seven reporting segments are as follows:

 Emplifi

   The Emplifi segment consists of Emplifi, Inc., the Company's wholly-owned
subsidiary. Emplifi provides custom application development and design services
and package implementation and application support services to large and
medium-sized client organizations. Emplifi's capabilities include client-
directed software design and customization; web-focused strategic consulting;
domain expertise in a variety of industries; and enterprise application
integration services. Most of Emplifi's client engagements involve the
development of customized software solutions.

   Emplifi markets its services to application development managers and
information technology directors within prospective client companies. Emplifi
also responds to requests for proposals for preferred vendor status to win
long-term engagement relationships. Emplifi typically enters into an initial
client contract with a relatively short duration. This contract is often
extended, and the average duration of a client project is approximately nine to
ten months. Emplifi's contracts generally provide for payment on a time-and-
materials basis, based on the number of consultant hours worked on the project.
Clients typically have the right to cancel contracts with minimal notice.

   Emplifi serves large and medium-sized client organizations in a wide variety
of industries. During the quarter ended March 31, 2001, Emplifi's top five
clients accounted for approximately 17% of its revenues. Emplifi did not have a
client that accounted for more than 10% of revenues.

   Emplifi is headquartered in Pittsburgh, Pennsylvania, and maintains offices
in San Francisco, California; Dallas, Texas; and Raleigh, North Carolina.
Emplifi has over 1,100 employees.

 Mascot

   The Mascot segment consists of Mascot Systems Ltd. ("Mascot Systems"), the
Company's majority-owned Indian subsidiary. Mascot Systems effected an initial
public offering of its Common Stock on three stock exchanges in India in June
2000. Mascot provides custom and package application development, application
maintenance outsourcing, business intelligence services, and application re-
engineering. Mascot utilizes an Offshore Development Center ("ODC") model,
which offers clients certain advantages compared to domestic development,
including significant cost savings and faster "around the clock" delivery.
Mascot provides many of its service offerings through its ODCs in Bangalore,
Pune, and Chennai, India.

   Mascot's service offerings include custom application development utilizing
newer technologies (such as BEA, Versata, ATG, etc.) to convert legacy systems
to an Internet-based platform, application maintenance, business intelligence,
and application reengineering and conversion.

   Mascot markets its services to chief financial officers and chief
information officers within prospective client companies. Mascot typically
enters into an initial client contract with an average duration of
approximately nine to ten months. Mascot's fixed price contracts generally
provide for payment based upon deliverables and project milestones reached.
Mascot's other contracts provide for payment on a time-and-materials basis,
based on the number of consultant hours worked on the project. Clients
typically have the right to cancel contracts with minimal notice. Contracts
with deliverables or project milestones can provide for certain penalties if
the deliverables or project milestones are not met within a contract timeline.

   Mascot serves large and medium-sized client organizations in a wide variety
of industries. Mascot is a Global Preferred Partner of General Electric. During
the quarter ended March 31, 2001, Mascot derived approximately 58% of its
revenues from its top five clients. Sales to General Electric Company accounted
for approximately 38% of Mascot's first quarter 2001 revenues.

                                       9
<PAGE>

   Mascot is headquartered in Bangalore, India and has offices in the Indian
cities of Chennai, Pune, and Mumbai. Mascot's U.S. headquarters is in
Pittsburgh, Pennsylvania. Mascot also has offices in Singapore, the
Netherlands, England, Japan, Sweden and Canada. Mascot has over 1,200 employees
worldwide.

   eJiva

   The eJiva segment consists of eJiva, Inc., a wholly-owned subsidiary of the
Company. eJiva provides custom enterprise application implementation, customer
relationship management applications implementation, supply chain management
applications implementation and business process consulting. eJiva's
capabilities include software design and customization; strategic consulting;
domain expertise in a variety of industries; and enterprise application
integration services. Most of eJiva's client engagements involve the
development of customized software solutions.

   eJiva markets its services to information technology directors and chief
information officers within prospective client companies. eJiva typically
enters into an initial client contract with an average duration of
approximately nine to ten months. eJiva's fixed price contracts generally
provide for payment based upon deliverables and project milestones reached.
Some of eJiva's contracts provide for payment based on a time-and-materials
basis, based on the number of consultant hours worked on the project. Clients
typically have the right to cancel contracts with minimal notice.

   eJiva serves large and medium-sized client organizations in a wide variety
of industries. During the quarter ended March 31, 2001, approximately 38% of
eJiva's revenues was derived from its top five clients. Revenues from General
Electric Company accounted for approximately 22% of eJiva's first quarter 2001
revenues.

   eJiva is headquartered in Pittsburgh, Pennsylvania, and maintains offices in
Atlanta, Georgia; Cincinnati, Ohio; Columbus, Ohio; Pleasanton, California; and
Washington, D.C. eJiva has more than 650 employees.

 Emerging eServices

   The Emerging eServices segment consists of RedBrigade Ltd. and its European
subsidiaries ("RedBrigade"), itiliti, Inc. ("itiliti"), Innovative Resource
Group, Inc. ("IRG"), Symphoni Interactive, LLC ("Symphoni"), MobileHelix, Inc.
("MobileHelix"), and Jobcurry Systems, Private Ltd. ("jobcurry"). RedBrigade,
MobileHelix, and jobcurry are wholly-owned subsidiaries of the Company.
itiliti, IRG, and Symphoni are majority-owned subsidiaries of the Company. The
companies within the Emerging eServices segment are younger, less mature
entities that are individually involved in separate niches in the eServices
market. RedBrigade provides web integration services in the European market.
MobileHelix is in the process of developing wireless applications for the
financial services market. itiliti develops and markets software for the
management of outside vendors. IRG is developing business intelligence
software, and also provides services in the data warehousing/business
intelligence market sector. Symphoni provides application development services
to the financial services industry. jobcurry provides recruiting and placement
services for iGate and outside customers.

   The Emerging eServices companies market their services to chief financial
officers, and chief technology officers within prospective client companies.
The companies' fixed price contracts generally provide for payment based upon
deliverables and the achievement of project milestones. A portion of the
contracts provide for payment based on a time-and-materials basis, based on the
number of consultant hours worked on the project. Clients typically have the
right to cancel contracts with minimal notice. jobcurry's contracts generally
provide for the payment of a fee upon the placement of a candidate.

   For the first quarter of 2001, sales to Philip Morris and Bank of America
each totaled 11% of the revenues of the Emerging eServices segment.

   RedBrigade is headquartered in Bracknell, England, and has offices in
Ireland, Scotland, and South Africa. itiliti is headquartered in Minneapolis,
Minnesota. IRG is headquartered in Pittsburgh, Pennsylvania. Symphoni

                                       10
<PAGE>

is headquartered in San Francisco, California and has offices in Pittsburgh,
Pennsylvania; New York, New York; and Charlotte, North Carolina. MobileHelix is
headquartered in Chantilly, Virginia. jobcurry.com is headquartered in Pune,
India. The companies in the Emerging eServices segment collectively have more
than 400 employees.

 Value Services

   The Value Services segment consists of Chen & McGinley, Inc. ("CMI"), Global
Financial Services of Nevada, Inc. ("GFS"), and Direct Resources (Scotland)
Ltd. ("Direct Resources"), all wholly-owned subsidiaries of the Company. The
Value Services companies provide information technology ("IT") services that
are jointly managed with the client to large and medium-sized client
organizations. The capabilities of the companies in the Value Services segment
include IT consulting services and application solutions.

   Companies in the Value Services segment market their services to project
managers and IT directors within prospective client companies and respond to
requests for proposals for preferred vendor status to win long-term engagement
relationships. The Value Services companies typically enter into an initial
client contract with a relatively short duration. This contract is often
extended, and the average duration of a client project is approximately six
months. All Value Services contracts provide for payment on a time-and-
materials basis, based on the number of consultant hours worked on the project.
Clients typically have the right to cancel contracts with minimal notice.
Intelligent Finance accounted for approximately 12% of the first quarter 2001
revenue of the Value Services segment.

   CMI is headquartered in San Francisco, California. GFS is headquartered in
San Francisco, California and has offices in New York, New York. Direct
Resources is headquartered in Scotland. The companies in the Value Services
segment collectively have more than 200 employees.

 Staffing Services

   The Staffing Services segment consists of Mastech Application Services, Inc.
("MAS"), Quantum Information Resources, Ltd. ("Quantum"), and Mastech Asia
Pacific Ltd. ("MAP"), all wholly-owned subsidiaries of the Company. MAS
provides staff augmentation services to large integrators in the United States.
Quantum provides IT and staff augmentation services to large and medium-sized
companies in Canada. MAP provides IT and staff augmentation services to large
and medium-sized companies in Australia. All consultants in Staffing Services
are supervised and instructed by onsite client personnel. Capabilities of the
companies in the Staffing Services segment include data processing and IT
maintenance and support.

   The companies in the Staffing Services segment market their services to
project managers and IT directors within prospective client companies and
respond to requests for proposals for preferred vendor status to win long-term
engagement relationships. Staffing Services companies typically enter into an
initial client contract with a relatively short duration. This contract is
often extended, and the average duration of a client project is approximately
six months. All Staffing Services' contracts provide for payment on a time-and-
materials basis, based on the number of consultant hours worked on the project.
Clients typically have the right to cancel contracts with minimal notice.

   The companies in the Staffing Services segment serve large and medium-sized
client organizations in a wide variety of industries. During the first quarter
of 2001, sales to International Business Machines Corporation and Electronic
Data Systems Corporation accounted for 15% and 11%, respectively, of the
Staffing Services segment's revenues.

   MAS is headquartered in Pittsburgh, Pennsylvania. Quantum is headquartered
in Mississauga, Canada. MAP is headquartered in Canberra, Australia, and has
offices in Melbourne, Sydney, and Brisbane, Australia. The companies in the
Staffing Services segment collectively have more than 650 employees.

                                       11
<PAGE>

   iGate Corporate

   The iGate Corporate segment is a non-revenue-producing segment that captures
corporate costs, joint ventures, other strategic investment activity, and other
unallocated charges.

   The accounting policies of the segments are the same as those described in
the summary of significant accounting policies. The Company evaluates segment
performance based upon profit or loss from operations. The Company does not
allocate income taxes, other income or expense and non-recurring charges to
segments. In addition, the Company accounts for inter-segment sales and
transfers at current market prices, with gross margins being eliminated in the
iGate segment.

   During the first quarter of 2001, sales to General Electric Company
accounted for 12% of the consolidated revenues of the Company.

   The following tables present selected financial information for the
Company's reporting segments for the quarters ended March 31, 2001 and 2000:

<TABLE>
<CAPTION>
                                Three Months Ended March 31, 2001 (Dollars in thousands)
                         ------------------------------------------------------------------------
                                 Mascot           Emerging   Value   Staffing    iGate
                         Emplifi  Ltd.    eJIVA   eServices Services Services  Corporate  Total
                         ------- ------- -------  --------- -------- --------  --------- --------
<S>                      <C>     <C>     <C>      <C>       <C>      <C>       <C>       <C>
Revenues................ $29,907 $21,799 $20,154   $16,181  $12,919  $18,508    $   --   $119,468
Direct costs............  19,405  12,818  10,234     8,906    9,559   14,199        --     75,121
                         ------- ------- -------   -------  -------  -------    -------  --------
Gross margin............  10,502   8,981   9,920     7,275    3,360    4,309        --     44,347
Operating expenses......   5,490   6,259  10,327    10,053    2,338    3,699      7,641    45,807
                         ------- ------- -------   -------  -------  -------    -------  --------
Operating margin........ $ 5,012 $ 2,722 $  (407)  $(2,778) $ 1,022  $   610     (7,641)   (1,460)
                         ======= ======= =======   =======  =======  =======
Other income (expense),
 net....................                                                         (3,525)   (3,525)
Equity in losses of
 unconsolidated
 affiliates.............                                                         (4,119)   (4,119)
Minority interest.......                                                           (471)     (471)
Gain on sale of
 unconsolidated
 affiliate..............                                                         16,706    16,706
Loss on impairment of
 investments............                                                         (5,500)   (5,500)
                                                                                -------  --------
Income (loss) before
 income taxes...........                                                        $(4,550) $  1,631
                                                                                =======  ========

<CAPTION>
                                Three Months Ended March 31, 2000 (Dollars in thousands)
                         ------------------------------------------------------------------------
                                 Mascot           Emerging   Value   Staffing    iGate
                         Emplifi  Ltd.    eJIVA   eServices Services Services  Corporate  Total
                         ------- ------- -------  --------- -------- --------  --------- --------
<S>                      <C>     <C>     <C>      <C>       <C>      <C>       <C>       <C>
Revenues................ $26,793 $13,162 $17,386   $12,187  $19,804  $20,759    $    --  $110,091
Direct costs............  17,784   8,033   9,888     7,858   15,061   16,849         --    75,473
                         ------- ------- -------   -------  -------  -------    -------  --------
Gross margin............   9,009   5,129   7,498     4,329    4,743    3,910         --    34,618
Operating expenses......   5,328   4,084   8,196     6,165    3,229    6,800      5,553    39,355
                         ------- ------- -------   -------  -------  -------    -------  --------
Operating margin........ $ 3,681 $ 1,045 $  (698)  $(1,836) $ 1,514  $(2,890)    (5,553)   (4,737)
                         ======= ======= =======   =======  =======  =======
Other income (expense),
 net....................                                                           (520)     (520)
Equity in losses of
 unconsolidated
 affiliates.............                                                         (1,660)   (1,660)
Minority interest.......                                                            221       221
                                                                                -------  --------
Income (loss) before
 income taxes...........                                                        $(7,512) $ (6,696)
                                                                                =======  ========
</TABLE>

                                       12
<PAGE>

   Assets by segment were as follows at March 31, 2001 (dollars in thousands):

<TABLE>
<S>                                                                     <C>
Emplifi................................................................ $ 29,116
Mascot.................................................................   55,487
eJiva..................................................................   33,150
Emerging eServices.....................................................   26,502
Value Services.........................................................   11,497
Staffing Services......................................................   26,938
iGate Corporate........................................................  161,062
                                                                        --------
Total assets........................................................... $343,752
                                                                        ========
</TABLE>

   Revenues and assets by geographic area consisted of the following:

<TABLE>
<CAPTION>
                                                                 Three Months
                                                                Ended March 31,
                                                               -----------------
                                                                 2001     2000
                                                               -------- --------
                                                                  (Dollars in
                                                                  thousands)
<S>                                                            <C>      <C>
Revenues:
United States................................................. $ 74,520 $ 82,909
Canada........................................................    6,145    6,071
Europe and Africa.............................................    8,146    7,646
Pacific Rim...................................................   30,657   13,465
                                                               -------- --------
  Total revenues.............................................. $119,468 $110,091
                                                               ======== ========

<CAPTION>
                                                                As at March 31,
                                                               -----------------
                                                                 2001     2000
                                                               -------- --------
                                                                  (Dollars in
                                                                  thousands)
<S>                                                            <C>      <C>
Assets:
United States................................................. $254,594 $262,428
Canada........................................................    8,210   11,251
Europe and Africa.............................................    9,368   19,945
Pacific Rim...................................................   71,580   31,590
                                                               -------- --------
  Total assets................................................ $343,752 $325,214
                                                               ======== ========
</TABLE>

6. Subsequent Events

   Speechworks International, Inc. ("Speechworks"), one of Highgate's holdings,
effected an initial public offering on August 4, 2000. In February 2001, the
Company entered into a forward contract for the sale of 300,000 shares of
Speechworks Common Stock at $31.13 per share. The forward contract matured on
April 23, 2001. After the maturation of the forward contract, the Company
retained approximately 115,000 shares of Speechworks Common Stock.

(f) Report of Independent Public Accountants

To the Board of Directors of iGate Capital Corporation:

   We have reviewed the accompanying condensed consolidated balance sheet of
iGate Capital Corporation (a Pennsylvania Corporation) and its subsidiaries as
of March 31, 2001, the related condensed consolidated statements of operations,
shareholders' equity and comprehensive income, and cash flows for the three-
month periods ended March 31, 2001 and 2000. These condensed consolidated
financial statements are the responsibility of the Company's management.

                                       13
<PAGE>

   We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with auditing standards generally accepted in the United States,
the objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.

   Based on our review, we are not aware of any material modifications that
should be made to the accompanying condensed consolidated financial statements
referred to above for them to be in conformity with accounting principles
generally accepted in the United States.

   We have previously audited, in accordance with auditing standards generally
accepted in the United States, the consolidated balance sheet of iGate Capital
Corporation and its subsidiaries as of December 31, 2000, (not presented
herein), and, in our report dated February 10, 2001, we expressed an
unqualified opinion on that statement. In our opinion, the information set
forth in the accompanying condensed consolidated balance sheet as of December
31, 2000, is fairly stated, in all material respects, in relation to the
consolidated balance sheet from which it has been derived.

                                          /s/ Arthur Andersen LLP

Pittsburgh, Pennsylvania,
May 10, 2001

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

   The following discussion and analysis should be read in conjunction with
Part II, Item 7 of the registrant's Annual Report on Form 10-K for the year
ended December 31, 2000, as amended (the "2000 Form 10-K"). The following
discussion should also be read in conjunction with the Condensed Consolidated
Financial Statements and notes thereto appearing elsewhere in this Quarterly
Report on Form 10-Q ("Form 10-Q"). The information contained herein is not a
comprehensive management overview and analysis of the financial condition and
results of operations of the iGate Capital Corporation ("iGate" or the
"Company"), but rather updates disclosures made in the 2000 Form 10-K.

   This Form 10-Q contains statements that are not historical facts and that
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements can be identified by
the use of words such as "believes," "expects," "may," "will," "should,"
"intends," "continue," "anticipates," or by similar expressions, and can also
be found in discussions of our strategy and our plans. The reader should not
place undue reliance on these forward-looking statements. These statements
involve important risks and uncertainties that could cause our actual results
to differ materially from those expressed or implied in any forward-looking
statements. We assume no obligation to update these forward-looking statements
as circumstances change. While we cannot predict all of these risks and
uncertainties, important risk factors that could cause actual results to differ
materially from our current beliefs and expectations are discussed below under
the heading "Risk Factors" and in other documents we file with the Securities
and Exchange Commission.

   OVERVIEW

   iGate Capital Corporation, formerly named Mastech Corporation, was
incorporated in the Commonwealth of Pennsylvania on November 12, 1996 and,
through operating subsidiaries, is a worldwide provider of information
technology ("IT") services and electronic commerce services ("eServices") to
large and medium-sized organizations.

                                       14
<PAGE>

   Our operating subsidiaries provide their clients with a broad range of IT
applications solutions and eServices, including: client/server design and
development, conversion/migration services, enterprise resource planning (ERP)
package implementation services, electronic business systems and applications
maintenance outsourcing. These services are provided in a variety of computing
environments and use leading technologies, including client/server
architecture, object oriented programming languages and tools, distributed
database management systems and the latest networking and communications
technologies.

   Our business is organized into seven segments, which consist of Emplifi,
Mascot, eJiva, Emerging eServices, Value Services, Staffing Services, and iGate
Corporate. Each of our reporting segments is described below.

   Emplifi: The Emplifi segment ("Emplifi") consists of Emplifi, Inc., our
wholly-owned subsidiary. Emplifi provides custom application development and
design services, package implementation, and application support services.
Emplifi's capabilities include client-directed software design and
customization, web-focused strategic consulting, domain expertise in a variety
of industries, and enterprise application integration services. Most of
Emplifi's client engagements involve the development of customized software
solutions.

   Mascot: The Mascot segment ("Mascot") consists of Mascot Systems, Ltd.
("Mascot Systems") and subsidiaries. Mascot Systems is our majority-owned
Indian subsidiary. Mascot provides custom and package application development,
application maintenance outsourcing, business intelligence services, and
application reengineering. Mascot utilizes an Offshore Development Center
("ODC") model, which offers clients certain advantages compared to domestic
development, including significant cost savings and faster delivery. Mascot
provides many of its services through its ODCs in Bangalore, Pune, and Chennai,
India.

   eJiva: The eJiva segment ("eJiva") consists of eJiva, Inc., our wholly-owned
subsidiary. eJiva provides custom enterprise application implementation,
customer relationship management applications implementation, supply chain
management applications implementation, and business process consulting.
eJiva's capabilities include software design and customization, strategic
consulting, domain expertise in a variety of industries, and enterprise
application integration services. Most of eJiva's client engagements involve
the development of customized software solutions.

   Emerging eServices: The Emerging eServices segment consists of RedBrigade
Ltd. and its subsidiaries ("RedBrigade"), itiliti, Inc. ("itiliti"), Innovative
Resource Group, Inc. ("IRG"), Symphoni Interactive, LLC ("Symphoni"),
MobileHelix, Inc. ("MobileHelix"), and Jobcurry Systems, Private Ltd.
("jobcurry"). RedBrigade, MobileHelix, and jobcurry are wholly-owned
subsidiaries of the Company. IRG, itiliti, and Symphoni are majority-owned
subsidiaries of the Company. The companies within the Emerging eServices
segment are younger, less mature entities that are individually involved in
separate niches in the eServices market. RedBrigade provides web integration
services in the European market. MobileHelix is in the process of developing
wireless applications for the financial services market. Itiliti develops and
markets software for the management of outside vendors. IRG is developing
business intelligence software, and also provides services in the data
warehousing/business intelligence market sector. Symphoni provides application
development services to the financial services industry. Jobcurry provides
recruiting and placement services for iGate companies and outside customers.

   Value Services: The Value Services segment consists of Chen & McGinley, Inc.
("CMI"), Global Financial Services of Nevada, Inc. ("GFS"), and Direct
Resources (Scotland) Ltd. ("Direct Resources"), all wholly-owned subsidiaries
of the Company. The Value Services companies provide IT services that are
managed solely by the client to large and medium-sized organizations, with a
concentration in the financial services industry. The capabilities of the
companies in the Value Services segment include IT consulting services and
application solutions.

   Staffing Services: The Staffing Services segment consists of Mastech
Application Services, Inc. ("MAS"), Quantum Information Resources, Ltd.
("Quantum"), and Mastech Asia Pacific Ltd. ("MAP"), all wholly-

                                       15
<PAGE>

owned subsidiaries of the Company. MAS provides staff augmentation services to
large integrators in the United States. Quantum provides IT and staff
augmentation services to large and medium-sized companies in Canada. MAP
provides IT and staff augmentation services to large and medium-sized companies
in Australia. All consultants in Staffing Services are supervised and
instructed by onsite client personnel. Capabilities of the companies in the
Staffing Services segment include data processing and IT maintenance and
support.

   iGate Corporate: The iGate Corporate segment is a non-revenue producing
segment that captures corporate costs, joint ventures, other strategic
investment activity, and other unallocated charges.

   In February 2000, we formed Highgate Ventures I, LP, ("Highgate" or the
"Fund," formerly, iGate Ventures I, LP), a venture capital fund, which invests
in eServices companies. We have funded 100% of the costs of Highgate's
operations and investments. We are entitled to a preferred return upon the
liquidation of these investments equal to our original investments plus 80% of
the net capital gains on the investments. To date, we have invested
approximately $20 million in Highgate, including operating expenses of the
Fund. In February 2001, we ceased funding future investments in Highgate in
order to focus on our portfolio of operating subsidiaries. Highgate is
currently attempting to obtain additional financing outside of iGate. At the
end of May, we will determine whether we will continue efforts to raise
additional outside financing for the Fund. If we decide to discontinue the
Fund, all of the Fund's operations will immediately cease. Alternatively, we
may decide to continue to seek outside financing through July and reassess the
Fund's performance in July, 2001.

   Highgate accounts for its investments in Versata, Inc. and Speechworks, Inc.
("Speechworks") as available-for-sale securities under appropriate accounting
guidelines. The investments are marked to market on a monthly basis. Highgate
recognizes its proportionate share of income or loss in its investment in
VCampus, Inc. under the equity method of accounting. Highgate accounts for its
investments in Brainbench, Inc., Escend Technologies, Inc., and OrderCare
Corporation at the lower of cost or market value. In March 2001, Highgate
recorded losses due to impaired investments in Bluewater ($3.5 million) and
Xpede ($2.0 million).

   In February 2001, Highgate entered into a forward contract for the sale of
300,000 shares of Speechworks Common Stock at $31.13 per share. On April 23,
2001, we received approximately $8.8 million, net of broker's fees and other
costs. After the closing of the sale, we retained ownership of approximately
115,000 shares of Speechworks Common Stock.

   We hold a 50% ownership in Synerge, LLC, which does business under the name
of iProcess ("iProcess"), a provider of web-based business process outsourcing.
We also hold a 22% equity ownership in Air2Web, Inc., a provider of wireless
application services. These investments are accounted for under the equity
method of accounting, and our proportionate share of each affiliate's net
losses and amortization of our net excess investment over our net equity in
each affiliate's net assets is included in "Equity in losses of affiliates"
section of the Consolidated Statement of Operations.

   On February 28, 2001, the Company sold its approximate 50% interest in
Planning Technologies, Inc. ("PTI") to Red Hat, Inc. ("Red Hat") in exchange
for approximately 3.2 million shares of Red Hat's Common Stock. Pursuant to the
merger, approximately 10% of the shares of Red Hat Common Stock are held in
escrow, a portion of which are to be released on February 28, 2002. The
remaining portion of the escrowed shares will remain in escrow until the
settlement of one tax claim. From January through February 23, 2001, the
Company recorded its share of PTI's loss in accordance with equity accounting
rules. Upon the closing of the sale, the Company accounts for its investment in
Red Hat Common Stock in accordance with SFAS 115.

   The Company recorded a gain of approximately $16.7 million pursuant to the
transaction. The Company's portion of the proceeds on the sale was calculated
based upon Red Hat's closing price on February 28, 2001 of $6.4375.

Three Months Ended March 31, 2001 Compared to Three Months Ended March 31, 2000

   The following discussion compares the quarters ended March 31, 2001 and
March 31, 2000. References to the first quarter of 2001 and to the first
quarter of 2000 refer to the three-month periods ended March 31, 2001 and 2000,
respectively.

                                       16
<PAGE>

   Total revenue for the first quarter of 2001 was $119.5 million, compared to
$110.1 million for the first quarter of 2000, an increase of $9.4 million, or
9%. Revenues for Emplifi and eJiva increased by 12% and 16%, respectively, due
primarily to an increase in demand for the companies' domestic IT services.
Mascot's revenues increased by 66%, due to strong demand for Mascot's offshore
software development services, Mascot's purchase of certain Emplifi contracts,
and the reorganization of Mascot brought about by its June 2000 initial public
offering. Revenues for the Emerging eServices segment increased by 33% due to
the acquisitions of IRG and itiliti during the first quarter of 2000, as well
as our majority ownership of Symphoni. In addition, the Company had revenues in
the first quarter of 2001 from newly-formed entities jobcurry and MobileHelix,
and benefited from an increase in demand for RedBrigade's IT services. Revenues
from the Value Services segment decreased by 35%, due primarily from the
elimination of revenues from ENS, Inc. and the Company's Asian branch offices,
which were assigned to Mascot in the 2000 restructuring. In addition, revenues
from CMI decreased due to a reduction in demand for CMI's services. Revenues
from the Staffing Services segment decreased by 11% due to an overall decline
in demand for staffing services.

   Our cost of revenues was $75.1 million for the first quarter of 2001,
compared to $75.4 million for the first quarter of 2000, a decrease of $0.4
million, or 0.4%. Gross margin increased to 37% in the first quarter of 2001
from 31% in the first quarter of 2000. We decreased our use of non-employee
consultants for the comparative quarters. In addition, our billing rates
increased from quarter to quarter, offsetting consultants' salary expense.

   Selling, general, and administrative ("SG&A") expenses include all costs
that are not directly associated with our revenue-generating consultants. SG&A
expenses include salaries, rent, recruiting costs, depreciation and
amortization, legal and accounting fees, communications and facilities costs.
Our SG&A expenses were $45.8 million for the first quarter of 2001, or 38% of
revenues, compared to $39.4 million, or 36% of revenues, for the first quarter
of fiscal 2000, an increase of $6.4 million or 16%. During the first quarter of
2001, we incurred $2.2 million of costs associated with the severance costs
related to general and administrative headcount reductions. There were 11
employees terminated ranging from managing directors to administrative
personnel. The severance costs included salary and benefits, with severance
packages ranging from three to nine months' pay. These costs will be paid in
full by the end of the fiscal year. SG&A expenses increased during the first
quarter of 2001 in connection with the reorganization of the former Mastech
Systems Corporation into iGate Capital Corporation and its operating
subsidiaries. Human resources and employee costs increased as we built
management infrastructure at each of our operating companies and incurred
additional salary and benefits in connection with the additional personnel. Our
facilities costs increased as we moved from a centralized home office to
separate offices for each operating company. Our depreciation and amortization
costs increased due to increased capital spending and goodwill amortization
related to our year 2000 acquisitions. As we discussed earlier in this section,
we incurred severance and other costs as a function of our continued efforts to
cut costs. We anticipate that our SG&A expenses will begin to decrease as a
percentage of revenues in future periods. We believe that we have the
management structure in each segment necessary to sustain our growth in future
periods.

   Equity in losses of affiliated companies consists of our share of the net
losses of our joint ventures, iProcess and PTI, and of our equity investments,
such as Air2Web and VCampus. We sold our share of PTI on February 23, 2001,
and, accordingly, have recognized our share of PTI's losses for January and
February only. Equity in losses of affiliated companies for the first quarter
of 2001 totaled $4.1 million, compared to $1.6 million for the first quarter of
fiscal 2000, an increase of $2.5 million, or 148%. In the first quarter of
2000, we had no equity losses for PTI, and Air2Web's equity losses for March
2000 only. The majority of our joint ventures and equity investments involve
entities in the early stages of development. We expect to incur losses in these
companies until they are able to move beyond their respective start-up phases.
We expect this income statement line item and income classification to continue
to be significant, and at times volatile, as we continue to invest in eServices
companies.

   Other expense, net of other income, totaled $3.5 million in the first
quarter of 2001, compared to $0.5 million in the first quarter of 2000. During
the current period, other expense increased mainly due to

                                       17
<PAGE>

unfavorable foreign currency losses and a decline in value of our Speechworks
common stock warrants. Our interest expense approximated interest income for
the first quarter of 2001.

   Minority interest reflects the share of the net income or loss of our
majority-owned operating subsidiaries attributable to the minority owners.
Minority interest amounted to expense of $0.5 million for the first quarter of
2001, compared to income of $0.2 million for the first quarter of 2000. The
minority interest expense in 2001 consisted of the minority share of the net
income of Mascot and IRG, net of the minority share of the net loss of Symphoni
and itiliti. The minority interest income in 2000 was the minority share of the
net losses of Symphoni and itiliti, net of the minority share of the net income
of IRG.

   The gain on sale of unconsolidated affiliates in the first quarter of 2001
consisted of a $16.7 million gain on the sale of PTI. In February 2001, we sold
our approximate 50% interest in PTI to Red Hat in exchange for approximately
3.2 million shares of Red Hat Common Stock. We currently hold these shares of
Red Hat Common Stock. We marked the shares to market based upon the closing
price on March 30, 2001. Changes in the market value are reflected as
comprehensive income on the Consolidated Statement of Shareholders' Equity and
Comprehensive Income.

   The loss on impairment of investments in the first quarter of 2001 consisted
of losses totaling approximately $5.5 million to account for declines in the
market values of Highgate's Bluewater and Xpede investments.

   Our income tax provision was $0.7 million at an effective rate of 40% for
the first quarter of 2001, compared to an income tax benefit of $2.7 million at
an effective rate of 40% for the first quarter of 2000. Components of our
effective rate for the first quarter of 2001 include non-deductible goodwill
and equity losses, offset by a tax holiday in India related to our Mascot
subsidiary.

   During the first quarter of 2001, we had a gain on the cumulative effect of
a change in accounting principle of $0.9 million, net of tax. The net gain
resulted from our implementation of SFAS 133 on January 1, 2001. SFAS 133
establishes accounting and reporting standards requiring that all derivative
instruments (including certain derivative instruments embedded in other
contracts) be recorded on the balance sheet as either an asset or a liability
measured at their fair value. SFAS 133 requires that changes in a derivative's
fair value be recognized currently in earnings unless specific hedge criteria
are met. The net gain resulted from recording the net value of our derivative
investments in Speechworks common stock warrants and foreign currency forward
exchange contracts.

Liquidity and Capital Resources

   Our working capital position decreased by $6.6 million from December 31,
2000 to March 31, 2001. During the first quarter of 2001, we used a combination
of cash generated from operations and investment balances for general operating
purposes, to repay the revolving credit facility, and to fund certain operating
subsidiaries in their start-up phases. Our accounts receivable decreased $10.8
million during the first quarter of 2001, from $118.8 million at December 31,
2000 to $108.0 million at March 31, 2001, and our days sales outstanding
("DSO") decreased from 88 days at December 31, 2000 to 80 at March 31, 2001.
The decrease in DSO is primarily attributable to our collection efforts
following customer confusion related to our reorganizations in 2000.

   At March 31, 2001, we had cash and short-term investments of $23.8 million
and $39.7 million, respectively, compared to cash and short-term investments of
$22.8 million and $42.7 million, respectively, at December 31, 2000. Our short-
term investments consist primarily of short-term commercial paper, money market
funds, and other short-term investments that provide us liquidity. Our ability
to access cash quickly is still an important factor in our business model. Our
investments at March 31, 2001 and December 31, 2000 included $25.0 million that
was pledged to PNC Bank, N.A. ("PNC") in connection with our $50 million

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<PAGE>

secured credit facility (as amended, the "Credit Facility"). The provisions of
the Credit Facility require us to maintain at least $30 million in cash and
investments at PNC, including the $25 million that we pledged. During the first
quarter of 2001, we repaid $16.0 million on the Credit Facility using a
combination of cash generated from operations and the repayment of a $5.5
million loan owed to us by PTI. We repaid an additional $8 million on the
Credit Facility in April 2001 using proceeds from the sale of Speechworks
stock, reducing our outstanding balance on the Credit Facility to $18 million
at April 30, 2001, and increasing the amount available to us under the Credit
Facility, subject to compliance with borrowing base requirements and certain
covenants, to $32 million.

   At March 31, 2001, we had $20,000,000 outstanding on a Convertible
Promissory Note (as amended, the "GE Note") to GE Capital Equity Investments,
Inc. ("GE Capital"). The entire principal amount of the GE Note will mature on
July 22, 2004. Interest payments are payable semi-annually on January 31 and
July 31. The GE Note is convertible at any time after July 22, 2002 through its
maturity at the option of the holder, into shares of our Common Stock, subject
to provisions related to revenue targets for services provided to GE Capital
and certain of its affiliates. At March 31, 2001, the conversion price was
above the fair market value of our Common Stock.

   Going forward, we may be obligated to pay cash earnouts related to certain
prior acquisitions. These earnout arrangements were agreed upon at the time we
acquired our interests in these entities and will be paid if these companies
meet certain performance benchmarks. If all performance benchmarks are met, we
will pay cash earnouts of approximately $12 million over the twelve-month
period ending March 31, 2002.

   Consistent with our plans to take advantage of early-stage opportunities in
emerging eServices markets, we recognize the need to have cash readily
available for strategic investments, acquisitions, incubations, and to fund our
joint venture during its start-up phase. We believe that our operating expense
needs for all of our existing operations and investments for the twelve months
ending March 31, 2002 can be met through a combination of operating cash flow,
proceeds from the sale of some of our publicly-traded Venture Fund investments,
available cash balances and unused borrowings under the Credit Facility. Our
ability to acquire and incubate new companies, and to fund our joint venture
will be entirely dependent on the amount of excess cash generated from our
operating companies and our ability to raise capital from outside sources. We
cannot provide assurances that we will generate sufficient excess cash to
acquire and incubate new companies and make new investments, or that we will be
able to raise cash through additional borrowings and/or equity issuances on
terms acceptable to us.

   Our functional currency for financial reporting purposes is the US Dollar.
We generally invoice our clients and pay expenses in the local currency of the
country in which the client is located. Statement of Operations translation
gains and losses arising from differences between the functional and local
currencies are recognized in the Consolidated Statement of Operations, and have
not had a significant impact on the results of operations. Balance Sheet gains
and losses as a result of fluctuations in foreign currency exchange rates are
recognized in the Consolidated Statement of Shareholders' Equity and
Comprehensive Income as a component of comprehensive income. We continually
evaluate the economic conditions of each country in which we operate, and base
our foreign currency accounting policies on those assessments.

RISK FACTORS

   There are a number of risks and uncertainties that could cause actual
results to differ materially from our current beliefs and expectations
expressed or implied in this Form 10-Q. We cannot predict all of these risks
and uncertainties. However, please refer to a list of important risk factors in
the section entitled "Risk Factors" in Part I of our 2000 Form 10-K.


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<PAGE>

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

   We enter into foreign exchange contracts with PNC to reduce our foreign
exchange exposure on certain intercompany debt. At March 31, 2001, we had one
outstanding contract for the sale by iGate of 7 million Canadian dollars at an
exchange rate of 1.568 (US $4,464,286). When the contract matures on June 29,
2001, we expect to access the foreign exchange markets at the then-prevailing
exchange rate to purchase 7 million Canadian dollars for delivery to PNC. In
addition, we hold warrants to purchase common stock in a publicly-held company.
In accordance with SFAS No. 133, we record the value of the foreign exchange
contracts and the warrants to purchase stock on the Consolidated Balance Sheet
as either an asset or a liability. Changes in the fair value of the foreign
exchange contracts and warrants are recognized currently in earnings.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

   Neither iGate Capital Corporation nor any of its subsidiaries is party to
any litigation that is expected to have a material adverse effect on the
business or financial condition of the Company.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits:

   The following exhibit is filed with this report:

<TABLE>
<CAPTION>
   Exhibit
   Number                             Description
   -------                            -----------
   <C>     <S>
    10.1   Employment Agreement dated January 19, 2001 between iGate Capital
           Management, Inc. and Jonathan D. Bonime.
</TABLE>


(b) Reports on Form 8-K:

   The Company did not file any Reports on Form 8-K during the three months
ended March 31, 2001.

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<PAGE>

                                  SIGNATURES

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

                                            iGATE CAPITAL CORPORATION
                                              (REGISTRANT)

May 15, 2000                                /s/ Sunil Wadhwani
                                            --------------------------------
                                            Sunil Wadhwani
                                            Co-Chairman of the Board of
                                         Directors,
                                            Chief Executive Officer, and
                                         Director

May 15, 2000                                /s/ Michael Zugay
                                            --------------------------------
                                            Michael Zugay
                                            Senior Vice President, Chief
                                         Financial Officer


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