<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 September 30, 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)

              PENNSYLVANIA                             25-1802235
      (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)

       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 October 31, 2001 was 51,443,955.

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

                           iGATE CAPITAL CORPORATION

                         QUARTERLY REPORT ON FORM 10-Q
                    FOR THE QUARTER ENDED SEPTEMBER 30, 2001

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                           Page
                                                                           ----
 <C>      <S>                                                              <C>
  Part I. Financial Information.........................................     3

  Item 1. Condensed Consolidated Financial Statements:

      (a) Unaudited Condensed Consolidated Statements of Operations for
          the Three- and Nine-Month Periods Ended September 30, 2001 and
          2000..........................................................     3

      (b) Condensed Consolidated Balance Sheets as of September 30, 2001
          (unaudited) and December 31, 2000.............................     4

      (c) Unaudited Consolidated Statement of Shareholders' Equity and
          Comprehensive Loss for the Nine-Month Period Ended September
          30, 2001......................................................     5

      (d) Unaudited Condensed Consolidated Statements of Cash Flows for
          the Nine-Month Periods Ended September 30, 2001 and 2000......     6

          Notes to Unaudited Condensed Consolidated Financial
      (e) Statements....................................................     7

      (f) Report of Independent Public Accountants......................    17

             Management's Discussion and Analysis of Financial Condition
  Item 2. and Results of Operations.....................................    19

  Item 3. Quantitative and Qualitative Disclosure About Market Risk.....    28

 Part II. Other Information.............................................    28

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

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

  Item 6. Exhibits and Reports on Form 8-K..............................    28
          Signatures....................................................    29
</TABLE>

                                       2
<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         Nine Months Ended
                                          September 30,       September 30,
                                        ------------------  ------------------
                                          2001      2000      2001      2000
                                        --------  --------  --------  --------
<S>                                     <C>       <C>       <C>       <C>
Revenues............................... $ 97,885  $124,333  $327,757  $353,318
Cost of revenues.......................   63,822    79,075   209,703   232,678
                                        --------  --------  --------  --------
  Gross profit.........................   34,063    45,258   118,054   120,640
Selling, general and administrative....   34,010    47,338   120,471   132,134
Special items..........................    7,639        --     7,639        --
Goodwill impairment....................   36,803        --    36,803        --
                                        --------  --------  --------  --------
  Loss from operations.................  (44,389)   (2,080)  (46,859)  (11,494)
Equity in losses of affiliated
 companies.............................   (2,812)   (4,292)   (7,977)   (9,471)
Minority interest......................     (120)      (86)     (754)      639
Other (expense), net...................     (205)   (1,896)   (2,196)   (4,650)
Gain on issuance of stock of
 subsidiary............................      --        --        --     26,853
Net gain on venture investments........      --        --        823       --
Net (loss) gain on sale of PTI/Red
 Hat...................................   (3,022)      --     13,058       --
                                        --------  --------  --------  --------
  (Loss) income before income taxes....  (50,548)   (8,354)  (43,905)    1,877
Income tax (benefit) provision.........   (4,585)   (3,342)   (1,929)      750
                                        --------  --------  --------  --------
  (Loss) income before cumulative
   effect of change in accounting
   principle...........................  (45,963)   (5,012)  (41,976)    1,127
                                        ========  ========  ========  ========
Cumulative effect of change in
 accounting principle, net of
 tax of $592...........................      --        --        887       --
                                        --------  --------  --------  --------
  Net (loss) income.................... $(45,963) $ (5,012) $(41,089) $  1,127
                                        ========  ========  ========  ========
Net (loss) income per common share,
 basic:
  (Loss) income before cumulative
   effect of change in accounting
   principle...........................  $ (0.90)  $ (0.10)  $ (0.82)   $ 0.02
  Cumulative effect of change in
   accounting principle, net of tax          --        --       0.02       --
                                        --------  --------  --------  --------
Net (loss) income per common share,
 basic................................. $  (0.90) $  (0.10) $  (0.80) $   0.02
                                        ========  ========  ========  ========

Net (loss) income per common share,
 diluted:
  (Loss) income before cumulative
   effect of change in accounting
   principle...........................  $ (0.90)  $ (0.10)  $ (0.82) $   0.02
                                        --------  --------  --------  --------
  Cumulative effect of change in
   accounting principle, net of tax....      --        --       0.02       --
                                        --------  --------  --------  --------
Net (loss) income per common share,
 diluted............................... $  (0.90) $  (0.10) $  (0.80) $   0.02
                                        ========  ========  ========  ========
</TABLE>


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

                                       3
<PAGE>

(b)
                           iGATE CAPITAL CORPORATION

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

<TABLE>
<CAPTION>
                                                      September 30, December 31,
                                                          2001          2000
                                                      ------------- ------------
                                                       (Unaudited)   (Audited*)
<S>                                                   <C>           <C>
                       ASSETS
Current assets:
  Cash and cash equivalents..........................   $ 45,160      $ 22,773
  Investments........................................     14,407        17,660
  Restricted investments.............................     25,000        25,000
  Accounts receivable, net...........................     79,967       118,858
  Prepaid and other assets...........................     19,910        36,318
  Deferred income taxes..............................      8,729         6,006
                                                        --------      --------
    Total current assets.............................    193,173       226,615
Investments in unconsolidated affiliates.............     24,532        61,120
Property and equipment, net..........................     20,592        23,678
Intangible assets, net...............................     24,312        52,738
                                                        --------      --------
    Total assets.....................................   $262,609      $364,151
                                                        ========      ========
        LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Revolving credit facility..........................   $    --       $ 44,695
  Current portion of convertible promissory note.....     13,980           --
  Accounts payable...................................     13,260        17,724
  Accrued payroll and related costs..................     30,297        29,646
  Other accrued liabilities..........................     18,270        13,885
                                                        --------      --------
    Total current liabilities........................     75,807       105,950
  Convertible promissory note........................     10,000        20,000
  Other long-term liabilities........................      2,209           659
  Deferred income taxes..............................     11,863        20,021
  Minority interest..................................      8,415         6,934
                                                        --------      --------
    Total liabilities................................    108,294       153,564
                                                        --------      --------
Shareholders' equity:
  Preferred Stock, without par value.................        --            --
  Common Stock, par value $0.01 per share............        524           522
  Additional paid-in capital.........................    142,985       142,706
  Retained earnings..................................     32,410        73,499
  Deferred compensation..............................       (229)          --
  Common Stock held in treasury, at cost.............    (14,095)      (14,095)
  Accumulated other comprehensive (loss) income......     (7,280)        7,955
                                                        --------      --------
    Total shareholders' equity.......................    154,315       210,587
                                                        --------      --------
    Total liabilities and shareholders' equity.......   $262,609      $364,151
                                                        ========      ========
</TABLE>
--------
* Condensed from audited Consolidated Financial Statements.

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

                                       4
<PAGE>

(c)

                           iGATE CAPITAL CORPORATION

     CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE LOSS
                      NINE MONTHS ENDED SEPTEMBER 30, 2001
                             (Dollars in thousands)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                                                            Total
                     Common Stock                                                          Accumulated  Shareholders'
                   ---------------- Series A  Additional                                      Other      Equity and
                               Par  Preferred  Paid-in   Retained    Deferred   Treasury  Comprehensive Comprehensive
                     Shares   Value  Shares    Capital   Earnings  Compensation  Shares   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      $   0     $(14,095)   $  7,955      $210,587
Restricted stock
 award...........     150,000    2     --           279      --        (281)         --          --            --
Amortization of
 deferred
 compensation....         --   --      --           --       --          52          --          --             52
Comprehensive
 loss:
 Change in
  unrealized
  (loss) on
  investments....         --   --      --           --       --         --           --      (14,256)      (14,256)
 Currency
  translation
  adjustment.....         --   --      --           --       --         --           --         (979)         (979)
 Net loss........         --   --      --           --   (41,089)       --           --          --        (41,089)
                   ---------- ----     ---     --------  -------      -----     --------    --------      --------
Balance,
 September 30,
 2001............  52,257,455 $524       1     $142,985  $32,410      $(229)    $(14,095)   $ (7,280)     $154,315
                   ========== ====     ===     ========  =======      =====     ========    ========      ========
<CAPTION>
                   Comprehensive
                      (Loss)
                   -------------
<S>                <C>
Balance, December
 31, 2000........
Restricted stock
 award...........
Amortization of
 deferred
 compensation....
Comprehensive
 loss:
 Change in
  unrealized
  (loss) on
  investments....    $(14,256)
 Currency
  translation
  adjustment.....        (979)
 Net loss........     (41,089)
                   -------------
Balance,
 September 30,
 2001............    $(56,324)
                   =============
</TABLE>


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

                                       5
<PAGE>

(d)

                           iGATE CAPITAL CORPORATION

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Dollars in thousands)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                            Nine Months Ended
                                                              September 30,
                                                            ------------------
                                                              2001      2000
                                                            --------  --------
<S>                                                         <C>       <C>
Cash Flows From Operating Activities:
Operations:
Net (loss) income.......................................... $(41,089) $  1,127
Adjustments to reconcile net income to cash provided by
 operations:
  Depreciation and amortization............................    9,619     9,720
  Gain on issuance of stock by subsidiary..................      --    (26,853)
  Gain on sale of PTI/Red Hat, net.........................  (13,058)      --
  Net gain on venture investments..........................     (823)      --
  Loss on impairment of property and equipment.............    3,168       --
  Loss on impairment of goodwill...........................   36,803       --
  Deferred income taxes, net...............................   (1,465)  (23,863)
  Equity in losses of affiliated companies.................    7,977     9,471
  Minority interest........................................      754       639
  Amortization of deferred compensation....................       52       --
  Deferred revenue.........................................    2,069       314
  Lease costs associated with termination..................    1,270       --
Working capital items:
  Accounts receivable, net.................................   38,891   (22,048)
  Prepaid and other assets.................................   16,408     1,344
  Accounts payable.........................................   (4,464)    2,011
  Accrued and other current liabilities....................    3,247     4,739
                                                            --------  --------
    Net cash flows provided (used) by operating
     activities............................................   59,359   (43,399)
                                                            --------  --------
Cash Flows From Investing Activities:
Additions to property and equipment, net...................   (6,986)   (9,915)
Sales (purchases) of short-term investments, net...........    3,253    31,714
Acquisitions and contingent consideration, net.............   (9,735)  (11,279)
Investments in unconsolidated affiliates...................   (1,206)  (41,605)
Proceeds from sale of investments in unconsolidated
 affiliates................................................   18,376       --
                                                            --------  --------
    Net cash flows provided (used) by investing
     activities............................................    3,702   (31,085)
                                                            --------  --------
Cash Flows From Financing Activities:
Net (repayments) borrowings on credit facilities...........  (44,695)   42,000
Net proceeds from subsidiary financing and warrants........    5,000       --
Net proceeds from exercise of stock options................      --      8,709
Net payments on long-term debt.............................      --    (10,000)
Proceeds from issuance of stock by subsidiary, net of
 offering costs............................................      --     30,979
                                                            --------  --------
    Net cash flows provided (used) by financing
     activities............................................  (39,695)   71,688
                                                            --------  --------
Effect of currency translation.............................     (979)   (2,052)
                                                            --------  --------
Net change in cash and cash equivalents....................   22,387    (4,848)
Cash and cash equivalents, beginning of period.............   22,773    23,596
                                                            --------  --------
Cash and cash equivalents, end of period................... $ 45,160  $ 18,748
                                                            ========  ========
</TABLE>

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

                                       6
<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-and nine-month periods ended September 30, 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-and nine-month periods ended
September 30, 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 December 31, 2000 and for the three-
and nine-month periods ended September 30, 2000 to conform with the current
period presentation. The reclassifications include changes 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.

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 $0.9
million, net of tax, from the cumulative effect of the change in accounting
principle. At September 30, 2001, the Company had net derivative assets of $0.
The change in the value of net derivative assets was $0.4 million expense and a
$0.9 million expense for the quarter and nine-month periods, respectively,
ended September 30, 2001, and was recorded as Other income/(expense) on the
Consolidated Statement of Operations.

                                       7
<PAGE>

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 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 Loss. 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 any of the three- or nine-month periods
ended September 30, 2001 and 2000.

   On February 28, 2001, the Company sold its approximately 50% interest in
Planning Technologies, Inc. ("PTI") to Red Hat, Inc. ("Red Hat") in exchange
for approximately 3.2 million shares of Red Hat Common Stock. As part of the
agreement, approximately 10% of the shares of Red Hat Common Stock 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 as
available for sale securities in accordance with SFAS 115. The Company recorded
a gain of approximately $16.7 million pursuant to the Red Hat transaction. The
Company's portion of the proceeds on the sale was calculated based upon the
closing price of Red Hat Common Stock on February 23, 2001 of approximately
$6.44. Beginning in the second quarter of 2001, the Company began liquidating
its investment in the shares of Red Hat Common Stock. The Company sold 1.37
million shares of Red Hat Common Stock recognizing a realized loss in the
amount of $3.6 million. The gain of $16.7 million on the sale of PTI and the
realized losses incurred on the sale of Red Hat Common Stock are both
classified as "Net Gain on Sale of PTI/Red Hat" on the Condensed Consolidated
Statement of Operations.

   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. Additional impairment losses totaling $0.1
million were recorded in the second quarter of 2001 to record a decline in
market value of the Company's investment in eNDP, Inc. These impairments are
included as part of "Net Gain on Venture Investments" on the Condensed
Consolidated Statement of Operations.

   On June 20, 2001, the Company sold its 50% ownership interest in iProcess,
LLC ("iProcess") to GE India Ventures, Inc. for $4.3 million. The Company
recognized a gain of $1.9 million pursuant to this transaction. The gain
recorded is included as part of "Equity in losses of affiliated companies" on
the Condensed Consolidated Statement of Operations.

   In April 2001, the Company recorded a $6.5 million gain on the sale of
300,000 shares of Speechworks Common Stock which is included as part of "Net
Gain on Venture Investments" on the Condensed Consolidated Statement of
Operations.

                                       8
<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       Nine Months
                                                 Ended              Ended
                                             September 30,      September 30,
                                            -----------------  ----------------
                                              2001     2000      2001     2000
                                            --------  -------  --------  ------
<S>                                         <C>       <C>      <C>       <C>
Basic earnings per share:
 (Loss) income before cumulative change in
  accounting principle..................... $(45,963) $(5,012) $(41,976) $1,127
 Cumulative effect of change in accounting
  principle................................      --       --        887     --
                                            --------  -------  --------  ------
 Net (loss) income.........................  (45,963)  (5,012)  (41,089)  1,127
                                            --------  -------  --------  ------
Divided by:
 Weighted average common shares............   51,275   50,412    51,271  50,245
                                            --------  -------  --------  ------
Basic earnings per share................... $  (0.90) $ (0.10) $  (0.80) $ 0.02
                                            ========  =======  ========  ======
Diluted earnings per share:
 (Loss) income before cumulative change in
  accounting principle..................... $(45,963) $(5,012) $(41,976) $1,127
 Cumulative effect of change in accounting
  principle................................      --       --        887     --
                                            --------  -------  --------  ------
 Net (loss) income.........................  (45,963)  (5,012)  (41,089)  1,127
Divided by the sum of:.....................      --       --        --      --
                                            --------  -------  --------  ------
 Weighted average common shares............   51,275   50,412    51,271  50,245
 Dilutive effect of common stock
  equivalents..............................      --       --        --      833
 Diluted average common shares.............   51,275   50,412    51,271  51,078
                                            --------  -------  --------  ------
Diluted (loss) earnings per share.......... $  (0.90) $ (0.10) $  (0.80) $ 0.02
                                            ========  =======  ========  ======
</TABLE>
--------

   Earnings per share ("EPS") for all periods presented were computed in
accordance with the provisions of Statement of Financial Accounting Standards
No. 128, "Earnings Per Share." 1,387 shares reserved for issuance upon
conversion of a convertible promissory note were excluded from the computation
of diluted EPS because their effect would be antidilutive. Options to purchase
shares of 3,314 and 3,689 were excluded from the calculation of diluted EPS for
the three- and nine-month periods ended September 30, 2001 because their
exercise prices were above the average market prices for the applicable
periods. Options to purchase shares of 249 and 766 for the three- and nine-
month periods ended September 30, 2000, as well as 1,387 shares reserved for
issuance upon conversion of a convertible promissory note were excluded from
the computation of diluted EPS because their effect would be antidilutive.

5. Restructuring and Goodwill Impairment Charges

   In third quarter of 2001, the continued economic downturn caused us to do an
extensive review of our operations and certain overhead costs associated with
each reportable segment. In August 2001, we approved a restructuring plan (the
"plan"). Based upon our revenue trends and the general economic environment, we
decided to put a plan in place that would serve to cut excess costs in certain
of the operating segments. As part of this plan, we recorded severance costs in
the amount of $1.0 million. We reduced employee headcount by 84. These
employees ranged from executive level through administrative assistants, and
affected eJiva, Emerging eServices, and iGate Capital. We also recorded a $2.4
million retention bonus for one of our key executives. We also performed an
extensive fixed asset inventory in each reportable segment, in order to
identify any fixed assets, such as laptops and computer equipment that were
deemed to be in excess due to the headcount reduction as well as the continued
economic downturn. Based upon fixed asset inventory, we recorded write-downs of
$2.1 million. These write-downs of excess equipment were recorded in Emplifi,
eJiva, Emerging eServices, Value Services and iGate segments. We also decided
to exit our training function at the iGate level. Exit costs associated with
the training department were $0.8 million, consisting of education-related
licensing agreements entered into that will no longer be utilized. In the Value
Services segment, we recorded a

                                       9
<PAGE>

charge of $1.3 million for lease costs associated with the closure of our
office in San Francisco. Our total charge for the quarter ended September 30,
2001 totaled $7.6 million. We believe these steps were necessary due to
declines in demand and overall headcount. We believe that when our business
grows in future periods, we do have the necessary infrastructure in place to
support this growth and will not need to increase any costs similar to the
items we recorded as special items. We will continue to monitor our headcount
as well as our office space currently under leasing arrangements, which may
result in future charges.

   The components of the restructuring charges and the restructuring accrual at
September 30, 2001 are as follows:

<TABLE>
<CAPTION>
                                            Asset                   Accrued
                                    Total  Write-       Cash     September 30,
                                    Charge  downs   Expenditures     2001
          (in thousands)            ------ -------  ------------ -------------
<S>                                 <C>    <C>      <C>          <C>
Severance, retention bonus and
 related items..................... $3,385 $   --      $ (96)       $3,289
Exit costs of training activity....    834    (734)     (100)          --
Fixed asset write-downs............  2,120  (2,120)      --            --
Lease costs of office closure......  1,300     --        (30)        1,270
                                    ------ -------     -----        ------
Total.............................. $7,639 $(2,854)    $(226)       $4,559
                                    ====== =======     =====        ======
</TABLE>

Goodwill Impairment

   During the third quarter, in light of the continued economic downturn, and
in conjunction with the restructuring plan, we also performed an assessment of
the carrying values of our intangible assets. The intangible asset balance
consisting of goodwill, represents excess purchase price on certain of our
acquisitions in prior years. Our analysis was conducted in accordance with
Statement of Financial Accounting Standards (SFAS) No. 121 "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of"
guidelines and involved a combination of financial forecasting, discounted cash
flow analysis and valuation methodologies that we have used and currently do
use in valuing companies within our market sectors.

   In addition to the continued economic downturn, there were a number of
events which led us to analyze our goodwill for impairments. Certain units were
focused in the financial services industries or are in geographic areas that
suffered disproportionately higher revenue and business declines. In addition,
key co-founders of certain of our acquired business units left to pursue other
interests. There have been bankruptcies and related customer losses at the
impaired units. Finally, recent failed expressions of interests of certain
units have suggested impairments.

   Based upon the impairment tests that were conducted, we recorded a goodwill
impairment charge of $36.8 million, consisting of impairments on CMI of $21.8
million, Direct Resources Ltd. of $4.6 million, and Symphoni of $10.4 million.

6. 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 three- and nine-month
periods ended September 30, 2000 has been restated for comparative purposes.

   The Company's seven reporting segments are as follows:

 Emplifi

   The Emplifi segment consists of Emplifi, Inc., a wholly-owned subsidiary of
the Company. Emplifi provides custom application development and design
services and package implementation and application

                                       10
<PAGE>

support. 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 three- and nine-month periods ended September 30,
2001, 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 approximately 857 employees.

   During the quarter end September 30, 2001, Emplifi recorded a restructuring
charge of $2.7 million.

 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
September 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
Company. Sales to General Electric Company accounted for approximately 53% and
47% of Mascot's revenues for the three- and nine-month periods ended September
30, 2001, respectively. Sales to Agilent Technologies accounted for
approximately 6% and 7% of Mascot's revenues for the three- and nine-month
periods ended September 30, 2001.

   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 approximately 1,683
employees worldwide.


                                       11
<PAGE>

   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. We announced in July 2001, that
Innovative Resource, Inc. ("IRG"), formerly part of the Emerging eServices
segment merged with and into eliva. For segment reporting purposes, we have
recast eliva's segment to include IRG.

   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 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. IRG is
developing business intelligence software, and also provides services in the
data warehousing/business market sector.

   eJiva serves large and medium-sized client organizations in a wide variety
of industries. Revenues from General Electric Company accounted for
approximately 14 and 20% of eJiva's revenues for both the three- and nine-month
periods ended September 30, 2001, respectively. Sales to Philip Morris
accounted for 11% of revenues for the three-month period ended September 30,
2001, 14% of revenues for the nine-month period ended September 30, 2001.

   eJiva is headquartered in Pittsburgh, Pennsylvania, and maintains offices in
Atlanta, Georgia; Cincinnati, Ohio; Columbus, Ohio; Pleasanton, California; and
Washington, D.C. IRG is headquartered in Pittsburgh, Pennsylvania. eJiva has
approximately 387 employees.

   During the quarter ended September 30, 2001, eJiva recorded a restructuring
charge of $0.9 million.

 Emerging eServices

   The Emerging eServices segment consists of RedBrigade Ltd. and its European
subsidiaries ("RedBrigade"), itiliti, Inc. ("itiliti"), 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. We announced in July 2001, that
Innovative Resource, Inc. ("IRG"), formerly part of the Emerging eServices
segment merged with and into eJiva. For segment reporting purposes, we have
recast eJiva's segment to include IRG.

   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 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.

   Sales to Bank of America accounted for 11% of the revenues of the Emerging
eServices segment for the nine-month period ended September 30, 2001.

                                       12
<PAGE>

   RedBrigade is headquartered in Bracknell, England, and has offices in
Ireland, Scotland, and South Africa. itiliti is headquartered in Minneapolis,
Minnesota. Symphoni 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 500 employees.

   During the quarter ended September 30, 2001, Symphoni and Red Brigade
recorded restructuring charges in the amounts of $0.9 million and $0.3 million,
respectively, and Symphoni recorded a goodwill impairment charge of $10.4
million.

 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 nine
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 17% of the Value Services
segments' revenues for both the three- and nine-month periods ended September
30, 2001.

   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 259 employees.

   During the quarter ended September 30, 2001, CMI recorded a restructuring
charge of $1.3 million, and CMI and Direct Resources recorded goodwill
impairment charges aggregating $26.4 million.

 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
nine 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 third quarter
of 2001, sales to International Business Machines

                                       13
<PAGE>

Corporation and Electronic Data Systems Corporation accounted for 7% and 10%,
respectively, of the Staffing Services segment's revenues. For the nine-month
period ended September 30, 2001, sales to International Business Machines
Corporation and Electronic Data Systems Corporation accounted for 13% and 12%,
respectively, of the Staffing Services segment's revenues.

   MAS is headquartered in Pittsburgh, Pennsylvania. Quantum is headquartered
in Mississauga, Canada. MAP is headquartered in Sydney, Australia, and has
offices in Melbourne, Canberra, and Brisbane, Australia. The companies in the
Staffing Services segment collectively have more than 1,000 employees.

 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 iGate corporate segment has 32 employees.

   During the quarter ended September 30, 2001, iGate recorded a restructuring
charge of $1.5 million.

   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. All sales and costs are eliminated within
the operating segment.

   Sales to General Electric Company accounted for 15% and 14% of the
consolidated revenues of the Company for both the three- and nine-month periods
ended September 30, 2001, respectively.

   The following tables present selected financial information for the
Company's reporting segments for the three-and nine-month periods ended
September 30, 2001 and 2000 (unaudited):

<TABLE>
<CAPTION>
                              Three Months Ended September 30, 2001 (Dollars in thousands)
                         ---------------------------------------------------------------------------
                                                   Emerging    Value    Staffing   iGate
                         Emplifi  Mascot   eJiva   eServices  Services  Services Corporate   Total
                         -------  ------- -------  ---------  --------  -------- ---------  --------
<S>                      <C>      <C>     <C>      <C>        <C>       <C>      <C>        <C>
Revenues................ $24,737  $23,513 $12,781  $ 11,766   $  9,008  $16,080  $     --   $ 97,885
Cost of revenues........  16,330   13,958   7,432     6,825      6,900   12,377        --     63,822
                         -------  ------- -------  --------   --------  -------  --------   --------
Gross margin............   8,407    9,555   5,349     4,941      2,108    3,703        --     34,063
Operating expenses......   3,409    7,198   5,682     7,929      1,749    3,079     4,964     34,010
                         -------  ------- -------  --------   --------  -------  --------   --------
Operating margin before
 special items..........   4,998    2,357    (333)   (2,988)       359      624    (4,964)        53
Special items...........  (2,735)      --    (855)   (1,198)    (1,337)      --    (1,514)    (7,639)
Goodwill impairment.....      --       --      --   (10,443)   (26,360)      --        --    (36,803)
                         -------  ------- -------  --------   --------  -------  --------   --------
Operating margin........ $ 2,263  $ 2,357 $(1,188) $(14,629)  $(27,338) $   624    (6,478)   (44,389)
                         =======  ======= =======  ========   ========  =======
Equity in losses of
 affiliated companies...                                                           (2,812)    (2,812)
Minority interest.......                                                             (120)      (120)
Other (expense), net....                                                             (205)      (205)
Net gain on venture
 investments............                                                               --         --
Net (loss) on sale of
 PTI/Red Hat shares.....                                                           (3,022)    (3,022)
                                                                                 --------   --------
Loss before income
 taxes..................                                                         $(12,637)  $(50,548)
                                                                                 ========   ========
</TABLE>

                                       14
<PAGE>

<TABLE>
<CAPTION>
                              Three Months Ended September 30, 2000 (Dollars in thousands)
                         ------------------------------------------------------------------------
                                                  Emerging   Value   Staffing   iGate
                         Emplifi Mascot   eJiva   eServices Services Services Corporate   Total
                         ------- ------- -------  --------- -------- -------- ---------  --------
<S>                      <C>     <C>     <C>      <C>       <C>      <C>      <C>        <C>
Revenues................ $29,559 $19,277 $21,894   $15,203  $16,420  $21,980  $     --   $124,333
Cost of revenues........  18,168  10,627  11,751     8,615   12,964   16,950        --     79,075
                         ------- ------- -------   -------  -------  -------  --------   --------
Gross margin............  11,391   8,650  10,143     6,588    3,456    5,030        --     45,258
Operating expenses......   6,306   5,812  12,007     9,201    3,043    4,539     6,430     47,338
                         ------- ------- -------   -------  -------  -------  --------   --------
Operating margin........ $ 5,085 $ 2,838 $(1,864)  $(2,613) $   413  $   491    (6,430)    (2,080)
                         ======= ======= =======   =======  =======  =======
Equity in losses of
 affiliated companies...                                                        (4,292)    (4,292)
Minority interest.......                                                           (86)       (86)
Other (expense), net....                                                        (1,896)    (1,896)
                                                                              --------   --------
Income before income
 taxes..................                                                      $(12,704)  $ (8,354)
                                                                              ========   ========
</TABLE>

<TABLE>
<CAPTION>
                               Nine Months Ended September 30, 2001 (Dollars in thousands)
                          ---------------------------------------------------------------------------
                                                    Emerging    Value    Staffing   iGate
                          Emplifi  Mascot   eJiva   eServices  Services  Services Corporate   Total
                          -------  ------- -------  ---------  --------  -------- ---------  --------
<S>                       <C>      <C>     <C>      <C>        <C>       <C>      <C>        <C>
Revenues................  $82,917  $68,866 $52,591  $ 38,828   $ 33,396  $51,159  $     --   $327,757
Cost of revenues........   53,708   41,291  27,894    22,287     25,125   39,398        --    209,703
                          -------  ------- -------  --------   --------  -------  --------   --------
Gross margin............   29,209   27,575  24,697    16,541      8,271   11,761        --    118,054
Operating expenses......   14,981   19,954  25,548    25,550      6,166   10,429    17,843    120,471
                          -------  ------- -------  --------   --------  -------  --------   --------
Operating margin before
 special items..........   14,228    7,621    (851)   (9,009)     2,105    1,332   (17,843)    (2,417)
Special items...........   (2,735)      --    (855)   (1,198)    (1,337)      --    (1,514)    (7,639)
Goodwill impairment.....       --       --      --   (10,443)   (26,360)      --        --    (36,803)
                          -------  ------- -------  --------   --------  -------  --------   --------
Operating margin........  $11,493  $ 7,621 $(1,706) $(20,650)  $(25,592) $ 1,332   (19,357)   (46,859)
                          =======  ======= =======  ========   ========  =======
Equity in losses of
 affiliated companies...                                                            (7,977)    (7,977)
Minority interest.......                                                              (754)      (754)
Other (expense), net....                                                            (2,196)    (2,196)
Net gain on venture
 investments............                                                               823        823
Net gain on sale of PTI/
 Red Hat shares.........                                                            13,058     13,058
                                                                                  --------   --------
Loss before income
 taxes..................                                                          $(16,403)  $(43,905)
                                                                                  ========   ========
</TABLE>


                                       15
<PAGE>

<TABLE>
<CAPTION>
                              Nine Months Ended September 30, 2000 (Dollars in thousands)
                         ------------------------------------------------------------------------
                                                  Emerging   Value   Staffing    iGate
                         Emplifi Mascot   eJiva   eServices Services Services  Corporate  Total
                         ------- ------- -------  --------- -------- --------  --------- --------
<S>                      <C>     <C>     <C>      <C>       <C>      <C>       <C>       <C>
Revenues................ $84,102 $50,269 $60,826   $39,758  $53,834  $64,529    $    --  $353,318
Cost of revenues........  53,602  29,200  32,565    24,372   42,046   50,893         --   232,678
                         ------- ------- -------   -------  -------  -------    -------  --------
Gross margin............  30,500  21,069  28,261    15,386   11,788   13,636         --   120,640
Operating expenses......  16,982  15,127  31,746    24,724    9,290   15,994     18,271   132,134
                         ------- ------- -------   -------  -------  -------    -------  --------
Operating margin........ $13,518 $ 5,942 $(3,485)  $(9,338) $ 2,498  $(2,358)   (18,271)  (11,494)
                         ======= ======= =======   =======  =======  =======
Equity in losses of
 affiliated companies...                                                         (9,471)   (9,471)
Minority interest.......                                                            639       639
Other (expense), net....                                                         (4,650)   (4,650)
Net gain on venture
 investments............                                                             --        --
Gain on Mascot IPO......                                                         26,853    26,853
                                                                                -------  --------
Income before income
 taxes..................                                                        $(4,900) $  1,877
                                                                                =======  ========
</TABLE>

   Assets by segment were as follows at September 30, 2001 (dollars in
thousands):

<TABLE>
<S>                                                                     <C>
Emplifi................................................................ $ 19,094
Mascot.................................................................   57,402
eJiva..................................................................   20,771
Emerging eServices.....................................................   22,280
Value Services.........................................................    8,726
Staffing Services......................................................   24,339
iGate Corporate........................................................  109,997
                                                                        --------
Total assets........................................................... $262,609
                                                                        ========
</TABLE>

   Revenues and assets by geographic area consisted of the following:

<TABLE>
<CAPTION>
                                                Three Months
                                                   Ended       Nine Months Ended
                                               September 30,     September 30,
                                              ---------------- -----------------
                                               2001     2000     2001     2000
                                              ------- -------- -------- --------
                                                (Dollars in       (Dollars in
                                                 thousands)        thousands)
<S>                                           <C>     <C>      <C>      <C>
Revenues:
United States................................ $64,483 $ 90,135 $228,118 $256,883
Canada.......................................   5,441    6,555   17,432   19,082
Europe and Africa............................   8,428   11,186   25,265   30,945
Pacific Rim..................................  19,533   16,457   56,942   46,408
                                              ------- -------- -------- --------
  Total revenues............................. $97,885 $124,333 $327,757 $353,318
                                              ======= ======== ======== ========
</TABLE>

<TABLE>
<CAPTION>
                                                      September 30, December 31,
                                                          2001          2000
                                                      ------------- ------------
                                                        (Dollars in thousands)
<S>                                                   <C>           <C>
Assets:
United States........................................   $190,485      $274,671
Canada...............................................      8,268         8,345
Europe and Africa....................................      9,859        26,260
Pacific Rim..........................................     53.997        54,875
                                                        --------      --------
  Total assets.......................................   $262,609      $364,151
                                                        ========      ========
</TABLE>


                                       16
<PAGE>

7. Recently-Issued Accounting Pronouncements

   In July 2001, the Financial Accounting Standards Board issued Statements of
Financial Accounting No. 142, "Goodwill and Other Intangible Assets" ("SFAS
142"), which amend Accounting Principles Board ("APB") Opinion No. 16,
"Business Combinations" and supercede APB Opinion No. 17, "Intangible Assets".
SFAS 142 changes the accounting for intangible assets. The Company will adopt
SFAS 142 on January 1, 2002. Early adoption is not permitted for SFAS 142.
Beginning January 1, 2002, the Company will no longer amortize goodwill. The
Company will evaluate goodwill resulting from prior acquisitions for impairment
at least annually. The Company is currently reviewing the statements to
determine their financial statement impact. Goodwill amortization totaled $0.8
million and $2.5 million for the three- and nine-month periods, respectively,
ended September 30, 2001. Goodwill amortization totaled $1.6 million and $4.9
million for the three- and nine-months ended September 30, 2001, respectively
on our equity investments.

   SFAS No. 143 addresses financial accounting and reporting for obligations
associated with the retirement of tangible long-lived assets and the associated
asset retirement costs, it applies to legal obligations associated with the
retirement of long-lived assets that result from the acquisition, construction,
development and/or the normal operation of a long-lived asset. We are required
to adopt this standard on January 1, 2003 and are preparing a plan for
implementation.

   In August 2001, the Financial Accounting Standards Board issued SFAS No. 144
"Accounting for the Impairment of Disposal of Long-lived Assets." SFAS No. 144
addresses financial accounting and reporting for the impairment or disposal of
long-lived assets. The Company is required to adopt this standard in fiscal
years ending after December 15, 2001 and are preparing a plan for
implementation.

(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 September 30, 2001, the related condensed consolidated statements of
operations for each of the three-month and nine-month periods ended September
30, 2001 and 2000, shareholders' equity and comprehensive loss for the nine-
month period ended September 30, 2001, and cash flows for the nine-month
periods ended September 30, 2001 and 2000. These condensed consolidated
financial statements are the responsibility of the Company's management.

   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

                                       17
<PAGE>

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,
November 6, 2001

                                       18
<PAGE>

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.

   Some of the statements in this Form 10-Q that are not historical facts are
forward-looking statements. These forward-looking statements include our
financial, growth, and liquidity projections, as well as statements concerning
our plans, strategies, intentions and beliefs concerning our business, cash
flows, costs, and the markets in which we operate. These statements are based
on information currently available to us, and we assume no obligation to update
these statements as circumstances change. There are risks and uncertainties
that could cause actual events to differ materially from these forward-looking
statements. These risks include, but are not limited to, the level of market
demand for our services, the highly-competitive market for the types of
services that we offer, market conditions that could cause our customers to
reduce their spending for our services or cause prospective customers to decide
not to engage third-party providers of IT services, our ability to create,
acquire, and build new businesses and to grow our existing businesses, our
ability to attract and retain qualified personnel, currency fluctuations and
market conditions in India and elsewhere around the world, and our ability to
reduce costs and conserve cash in an uncertain economic environment. While we
cannot predict all of these risks and uncertainties, we refer you to the
important risk factors that could cause actual results to differ materially
from our current beliefs and expectations which are discussed under the heading
"Risk Factors" in Part I of the 2000 Form 10-K.

   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.

   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 its subsidiaries. Mascot Systems is our majority-owned
Indian subsidiary. Mascot provides custom and package

                                       19
<PAGE>

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. IRG is developing business
intelligence software, and also provides services in the data
warehousing/business intelligence market sector. We announced in July 2001,
that Innovative Resource, Inc. ("IRG"), formerly part of the Emerging eServices
segment merged with and into eJiva. For segment reporting purposes, we have
recast eJiva's segment to include IRG.

   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. Symphoni provides
application development services to the financial services industry. Jobcurry
provides recruiting and placement services for iGate companies and outside
customers. We announced in July 2001, that Innovative Resource, Inc. ("IRG"),
formerly part of the Emerging eServices segment merged with and into eJiva. For
segment reporting purposes, we have recast eJiva's segment to include IRG.

   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-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 invested
in eServices companies. We 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. In July 2001, we ceased operations of Highgate. Highgate
continues to hold investments in VCampus, Brainbench, Escend Technologies,
Inc., OrderCare, Versata and Speechworks. It has ceased any new investment
activities.

                                       20
<PAGE>

   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 of $5.5 million due to impaired investments in Bluewater
Information Convergence, Inc. ("Bluewater") and Xpede, Inc. ("Xpede"). In June
2001, Highgate recorded losses of $0.1 million due to impaired investments in
eNDP, Inc.

   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 owned approximately 115,000 shares of
Speechworks Common Stock.

   Through the nine months ended September 30, 2001, we held 23% equity
ownership in Air2Web, Inc. ("Air2Web"), a provider of wireless application
services. This investment is accounted for under the equity method of
accounting, and our proportionate share of Air2Web's net losses and
amortization of our net excess investment over our net equity in Air2Web's net
assets is included in "Equity in losses of affiliated companies" section of the
Consolidated Statement of Operations. At the end of the third quarter, Air2Web
successfully raised an additional $20 million in Series C Preferred Stock which
decreased our equity interest to approximately 14%. We did not participate in
this round of financing.

   On February 28, 2001, we sold our 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
agreement, 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, we
recorded our share of PTI's loss in accordance with equity accounting rules.
Upon the closing of the sale, we account for our investment in Red Hat Common
Stock in accordance with SFAS 115. We recorded a gain on the sale of PTI of
approximately $16.7 million. Our proceeds on the sale were calculated based
upon the closing price of Red Hat Common Stock on February 28, 2001 of
approximately $6.44. These losses are classified as "Net Gain on sale of
PTI/Red Hat" on the Condensed Consolidated Statement of Operations.

   Since June 2001, we sold 1.37 million shares of Red Hat Common Stock for an
aggregate of $5.3 million, net of fees. We recorded losses totaling $3.6
million pursuant to these transactions. These losses are classified as "Net
Gain on sale of PTI/Red Hat" on the Condensed Consolidated Statement of
Operations.

   On June 20, 2001, we sold our 50% interest in iProcess to GE India Ventures,
Inc. for $4.3 million in cash. We recorded a gain of $1.9 million pursuant to
the transaction. The gain recorded is included as part of "Equity in losses of
affiliated companies" in the Condensed Consolidated Statement of Operations.

Three Months Ended September 30, 2001 Compared to Three Months Ended September
30, 2000

   Total revenue for the third quarter of 2001 was $97.9 million as compared to
$124.3 million in 2000, a decrease of $26.4 million or 21.3%. Emplifi's
revenues have declined $4.8 million or 16.3% on a comparative quarter basis,
due to declines in demand, utilization of billable consultants and overall
billable consultant headcount. Bill rates for consultants on a comparative
quarter basis have had a negative impact on revenues. Revenues for the Emerging
eServices segment decreased $3.4 million or 22.6% as compared to the third
quarter in 2000. The companies within the segment are less mature than other
segments and have had difficulty increasing their respective market shares in a
slowing economy. eJiva's revenues have declined $9.1 million or 41.6%, as
compared to the third quarter of 2000, due to declines in project demands and
overall delays in projects caused by minimal capital spending of eJiva
customers. eJiva's operating results have been restated to include IRG. Values
Services segment revenues declined $7.4 million or 45.1%, due to a
deterioration in

                                       21
<PAGE>

certain geographic markets and declines in capital spending of the segment's
customers which decreased demand for jointly managed IT services. Staffing
Services segment revenues declined $5.9 million or 26.8%, which is mainly
attributable to decline in demand in the U.S. In addition, billing rates have
had a negative impact on revenues. Mascot's revenues have increased $4.2
million or 22.0%. Mascot has been able to increase their customer base, and
expand their service offerings to existing customers.

   Our gross margin was 34.8% for the third quarter 2001 as compared to 36.4%
for the same quarter in 2000. Gross margins decreased in Emplifi, Mascot, eJiva
and Emerging eServices. The decreases in gross margins in these segments were
attributable to a combination of pricing pressures increased use of subcontract
labor, and continued increases in employee related costs and benefits. Value
Services and Staffing Services segments gross margins increased slightly in
2001 as compared to 2000 as the use of subcontractors in these segments
declined as a percentage of revenues.

   Selling, general, and administrative ("S,G&A") expenses include all costs
that are not directly associated with our revenue-generating consultants. S,G&A
expenses include salaries and employee, rent, recruiting and training costs,
depreciation and amortization, legal and accounting fees as well as
communications and facilities costs. Our S,G&A costs were $34.0 million or
34.7% of revenue for the third quarter of 2001, as compared to $47.3 million or
38.1% of revenue for the third quarter of 2000. Due to the downturn in the
economy and a lower demand for our services, we have taken several steps to
control and reduce excess overhead expenses. Salaries and employee benefits
costs decreased mainly due to headcount reductions in previous quarters.
Corporate costs decreased in the third quarter of 2001 due to the absence of
certain costs incurred related to the 2000 reorganization and restructuring.
Our depreciation, amortization, rent and facilities costs have remained
constant from period to period. We will continue to monitor our S,G&A expenses
to ensure that we control costs in periods of declining revenue, while
maintaining the infrastructure that is needed in each segment to support and
sustain our growth in future periods. We believe the steps that we have taken
were necessary in periods of declining demands and revenues, and in addition,
that the current infrastructure in place will be able to support growth in
future periods without the need to significantly increase headcount, capital
expenditures or any overhead costs.

   In third quarter of 2001, the continued economic downturn caused us to do an
extensive review of our operations and certain overhead costs associated with
each reportable segment. In August 2001, we approved a restructuring plan (the
"plan"). Based upon our revenue trends and the general economic environment, we
decided to put a plan in place that would serve to cut excess costs in certain
of the operating segments. As part of this plan, we recorded severance costs in
the amount of $1.0 million. We reduced employee headcount by 84. These
employees ranged from executive level through administrative assistants, and
affected eJiva, Emerging eServices, and iGate Capital. We also recorded a $2.4
million retention bonus for one of our key executives. We also performed an
extensive fixed asset inventory in each reportable segment, in order to
identify any fixed assets, such as laptops and computer equipment that were
deemed to be in excess due to the headcount reduction as well as the continued
economic downturn. Based upon fixed asset inventory, we recorded write-downs of
$2.1 million. These write-downs of excess equipment were recorded in Emplifi,
eJiva, Emerging eServices, Value Services and iGate segments. We also decided
to exit our training function at the iGate level. Exit costs associated with
the training department were $0.8 million, consisting of education-related
licensing agreements entered into that will no longer be utilized. In the Value
Services segment, we recorded a charge of $1.3 million for lease costs
associated with the closure of our office in San Francisco. Our total charge
for the quarter ended September 30, 2001 totaled $7.6 million. We believe these
steps were necessary due to declines in demand and overall headcount. We
believe that when our business grows in future periods, we do have the
necessary infrastructure in place to support this growth and will not need to
increase any costs similar to the items we recorded as special items. We will
continue to monitor our headcount as well as our office space currently under
leasing arrangements, which may result in future charges.

                                       22
<PAGE>

   The components of the restructuring charges and the restructuring accrual at
September 30, 2001 are as follows:

<TABLE>
<CAPTION>
                                                                    Accrued
                                 Total     Asset        Cash     September 30,
                                 Charge Write-downs Expenditures     2001
         (in thousands)          ------ ----------- ------------ -------------
<S>                              <C>    <C>         <C>          <C>
Severance, retention bonus and
 related items.................. $3,385   $    --      $ (96)       $3,289
Exit costs of training
 activity.......................    834      (734)      (100)           --
Fixed asset write-downs.........  2,120    (2,120)        --            --
Lease costs of office closure...  1,300        --        (30)        1,270
                                 ------   -------      -----        ------
Total........................... $7,639   $(2,854)     $(226)       $4,559
                                 ======   =======      =====        ======
</TABLE>

Goodwill Impairment

   During the third quarter, in light of the continued economic downturn, and
in conjunction with the restructuring plan, we also performed an assessment of
the carrying values of our intangible assets. The intangible asset balance
consisting of goodwill, represents excess purchase price on certain of our
acquisitions in prior years. Our analysis was conducted in accordance with
Statement of Financial Accounting Standards (SFAS) No. 121 "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of"
guidelines and involved a combination of financial forecasting, discounted cash
flow analysis and valuation methodologies that we have used and currently do
use in valuing companies within our market sectors.

   In addition to the continued economic downturn, there were a number of
events which led us to analyze our goodwill for impairments. Certain units were
focused in the financial services industries or are in geographic areas that
suffered disproportionately higher revenue and business declines. In addition,
key co-founders of certain of our acquired business units left to pursue other
interests. There have been bankruptcies and related customer losses at the
impaired units. Finally, recent failed expressions of interests of certain
units have suggested impairments.

   Based upon the impairment tests that were conducted, we recorded a goodwill
impairment charge of $36.8 million, consisting of impairments on CMI of $21.8
million, Direct Resources Ltd. of $4.6 million, and Symphoni of $10.4 million.

   We recorded an equity loss in joint ventures of $2.8 million in the third
quarter of 2001 related to our equity losses in Air2Web and Vcampus. We had no
other equity investments during the quarter. All other equity investments have
been sold in prior quarters. These losses are included as part of "Equity in
losses of affiliated companies" on the Condensed Consolidated Statement of
Operations.

   Minority interest reflects the pro-rata share of net income or loss of our
majority-owned operating subsidiaries attributable to the minority owners.
Minority interest amounted to expense of $0.2 million in the third quarter of
2001, compared to $0.1 million in the third 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. In 2000, the minority share of the net losses of Symphoni and itiliti
exceeded the minority share of the net income of IRG and Mascot, resulting in a
favorable effect on the net income of the Company.

   We recorded $0.2 million of other expense in the third quarter of 2001,
which consists of interest income, interest expense, foreign exchange
translations on certain of our advances to our foreign subsidiaries and our
loss on venture investments of $0.4 million which relates to our write-down of
the value of Speechworks Warrants in accordance with Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and
Hedging Activities" effective January 1, 2001. For the same period in 2000, we
recorded $1.9 million of other expense, which consisted mainly of interest
expense on our debt with PNC and GE Equity.

   We recorded a loss of $3.0 million related to the sale of Red Hat Common
Stock received in connection with the merger of Planning Technologies, Inc. one
of our joint ventures. We will utilize these capital losses on

                                       23
<PAGE>

the sale of Red Hat Common Stock to offset capital gains on prior divestitures.
These losses are classified as "Net gain in sale of PTI/Red Hat" on the
Condensed Consolidated Statement of Operations.

   Our income tax benefit was $4.6 million at an effective rate of 9.1% for the
quarter ended September 30, 2001. Components of the effective rate for the
third quarter September 30, 2001 include the write-off of impaired goodwill
that is not recognized for tax purposes, non-deductible goodwill amortization
and equity losses, which are offset by a tax holiday in India related to our
Mascot subsidiary.

Nine Months Ended September 30, 2001 Compared to Nine Months Ended September
30, 2000

   Total revenue for the nine months ended September 30, 2001 was $327.8
million as compared to $353.3 million for the nine months ended September 30,
2000, a decrease of $25.5 million or 7.2%. Emplifi's revenues have declined
$1.2 million or 1.4% on a comparative period basis, due to declines in demand,
utilization of billable consultants and overall billable consultant headcount.
Bill rates for consultants for comparative periods basis have had a negative
impact on revenues. eJiva's revenues have declined $8.2 million or 13.5%, as
compared to the same period in 2000, due to declines in project demands, caused
by minimal capital spending of eJiva customers. eJiva's operating results have
been restated to include IRG. Revenues for the Emerging eServices segment
decreased $0.9 million or 2.3% as compared to 2000. The companies within the
segment are less mature than other segments and have had difficulty increasing
their respective market shares in a slowing economy. Values Services segment
revenues declined $20.4 million or 38.0%, due to declines in capital spending
of the segment's customers which decreased demand for jointly managed IT
services. Staffing Services segment revenues declined $13.4 million or 20.7%,
which is mainly attributable to declines in demand. In the U.S. billing rates
have had a negative impact on revenues. Mascot's revenues have increased $18.6
million or 37.0%. Mascot has been able to increase their customer base, and
expand their service offerings to existing customers.

   Our gross margin was 36.0% for the nine months ended September 30, 2001 as
compared to 34.1% for the same period in 2000. Gross margins decreased in
Emplifi and Mascot. The decreases in gross margins in these segments were
attributable to a combination of pricing pressures and continued increases in
employee related costs and benefits. Gross margins in eJiva, Emerging service
segment, Value Services segment and Staffing Services segment increased
slightly in 2001 as compared to 2000, as the use of subcontractors in these
segments declined as a percentage of revenues. Our Emerging services gross
margins increased due to increased revenues earned in the current year by
certain of our less mature companies within the segments.

   Selling, general, and administrative ("S,G&A") expenses include all costs
that are not directly associated with our revenue-generating consultants. S,G&A
expenses include salaries and employee, rent, recruiting and training costs,
depreciation and amortization, legal and accounting fees as well as
communications and facilities costs. Our S, G &A costs were $120.5 million or
36.8% of revenue for the nine months ended September 30, 2001, as compared to
$132.1 million or 37.4% of revenue for the same period in 2000. Due to the
downturn in the economy and a lower demand for our services, we have taken
several steps to control and reduce overhead expenses. Salaries and employee
benefits costs decreased due to headcount reductions in the quarter. Corporate
costs decreased for the period in 2001 due to the absence of certain costs
incurred related to the 2000 reorganization and restructuring. Our
depreciation, amortization, rent and facilities costs have remained constant
from period to period. We will continue to monitor our S,G&A expenses to ensure
that we control costs in periods of declining revenue, while maintaining the
infrastructure that is needed in each segment to support and sustain our growth
in future periods. We believe the steps that we have taken were necessary in
periods of declining demands and revenues, and in addition, that the current
infrastructure in place will be able to support growth in future periods
without the need to increase headcount, capital expenditures or any overhead
costs.

   In third quarter of 2001, the continued economic downturn caused us to do an
extensive review of our operations and certain overhead costs associated with
each reportable segment. In August 2001, we approved a restructuring plan (the
"plan"). Based upon our revenue trends and the general economic environment, we

                                       24
<PAGE>

decided to put a plan in place that would serve to cut excess costs in certain
of the operating segments. As part of this plan, we recorded severance costs in
the amount of $1.0 million. We reduced employee headcount by 84. These
employees ranged from executive level through administrative assistants, and
affected eJiva, Emerging eServices, and iGate Capital. We also recorded a $2.4
million retention bonus for one of our key executives. We also performed an
extensive fixed asset inventory in each reportable segment, in order to
identify any fixed assets, such as laptops and computer equipment that were
deemed to be in excess due to the headcount reduction as well as the continued
economic downturn. Based upon fixed asset inventory, we recorded write-downs of
$2.1 million. These write-downs of excess equipment were recorded in Emplifi,
eJiva, Emerging eServices, Value Services and iGate segments. We also decided
to exit our training function at the iGate level. Exit costs associated with
the training department were $0.8 million, consisting of education-related
licensing agreements entered into that will no longer be utilized. In the Value
Services segment, we recorded a charge of $1.3 million for lease costs
associated with the closure of our office in San Francisco. Our total charge
for the quarter ended September 30, 2001 totaled $7.6 million. We believe these
steps were necessary due to declines in demand and overall headcount. We
believe that when our business grows in future periods, we do have the
necessary infrastructure in place to support this growth and will not need to
increase any costs similar to the items we recorded as special items. We will
continue to monitor our headcount as well as our office space currently under
leasing arrangements, which may result in future charges.

   The components of the restructuring charges and the restructuring accrual at
September 30, 2001 are as follows:

<TABLE>
<CAPTION>
                                                                    Accrued
                                 Total     Asset        Cash     September 30,
                                 Charge Write-downs Expenditures     2001
         (in thousands)          ------ ----------- ------------ -------------
<S>                              <C>    <C>         <C>          <C>
Severance, retention bonus and
 related items.................. $3,385   $    --      $ (96)       $3,289
Exit costs of training
 activity.......................    834      (734)      (100)           --
Fixed asset write-downs.........  2,120    (2,120)        --            --
Lease costs of office closure...  1,300        --        (30)        1,270
                                 ------   -------      -----        ------
Total........................... $7,639   $(2,854)     $(226)       $4,559
                                 ======   =======      =====        ======
</TABLE>

Goodwill Impairment

   During the third quarter, in light of the continued economic downturn, and
in conjunction with the restructuring plan, we also performed an assessment of
the carrying values of our intangible assets. The intangible asset balance
consisting of goodwill, represents excess purchase price on certain of our
acquisitions in prior years. Our analysis was conducted in accordance with
Statement of Financial Accounting Standards (SFAS) No. 121 "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of"
guidelines and involved a combination of financial forecasting, discounted cash
flow analysis and valuation methodologies that we have used and currently do
use in valuing companies within our market sectors.

   In addition to the continued economic downturn, there were a number of
events which led us to analyze our goodwill for impairments. Certain units were
focused in the financial services industries or are in geographic areas that
suffered disproportionately higher revenue and business declines. In addition,
key co-founders of certain of our acquired business units left to pursue other
interests. There have been bankruptcies and related customer losses at the
impaired units. Finally, recent failed expressions of interests of certain
units have suggested impairments.

   Based upon the impairment tests that were conducted, we recorded a goodwill
impairment charge of $36.8 million, consisting of impairments on CMI of $21.8
million, Direct Resources Ltd. of $4.6 million, and Symphoni of $10.4 million

   Minority interest reflects the pro-rata share of net income or loss of our
majority-owned operating subsidiaries attributable to the minority owners.
Minority interest amounted to income of $0.8 million for the nine-month period
ended September 30, 2001 as compared to income of $0.6 million for the
comparative

                                       25
<PAGE>

period in 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. In 2000, the minority share of the net losses of
Symphoni and itiliti exceeded the minority share of the net income of IRG and
Mascot, resulting in a favorable effect on the net income of the Company.

   We recorded $2.2 million of other expense for the nine-month period ended
September 30, 2001, which consists of interest income, interest expense of
foreign exchange translations on certain of our advances to our foreign
subsidiaries. For the same period in 2000, we recorded $4.7 million of other
expense, which consisted mainly of interest expense on our debt with PNC and GE
Equity.

   Our gain on venture investments of $0.8 million relates to the gain on sale
of Speechworks stock offset by the impairment of other venture investments.

   We recorded a net gain of $13.1 million related to the sale of PTI to Red
Hat, offset by realized losses on the sale of Red Hat Common Stock. This net
gain is classified as "Net gain on sale of PTI/Red Hat" on the Condensed
Consolidated Statement of Operations.

   Our income tax benefit was $1.9 million at an effective rate of 4.4% for the
nine months ended September 30, 2001. Components of the effective rate for the
third quarter 2001 include the write-off of impaired goodwill that is not
recognized for tax purposes, non-deductible goodwill amortization and equity
losses which are offset by a tax holiday in India related to our Mascot
subsidiary.

   During 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 $3.2 million from December 31,
2000 to September 30, 2001. During the first nine months of 2001, we used a
combination of cash generated from operations and from sales of investments,
proceeds from paydowns of intercompany loans, and a refund related to our filed
2000 federal income tax return to repay the outstanding balance on our $50
million Secured Credit Facility (as amended, the "Credit Facility") with PNC
Bank, N.A. ("PNC"). Our accounts receivable decreased $38.9 million during the
first nine months of 2001, from $118.8 million at December 31, 2000 to $80.0
million at September 30, 2001, and our days sales outstanding ("DSO") decreased
from 88 days at December 31, 2000 to 74 days at September 30, 2001. During the
current period we have heightened our collection efforts resulting in this
overall improvement.

   At September 30, 2001, we had cash and short-term investments of $45.2
million and $14.4 million, respectively, compared to cash and short-term
investments of $22.8 million and $17.7 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. While our business model requires us to access cash quickly, we are
also focusing our attention on the conservation of cash during these uncertain
economic times. Our investments at September 30, 2001 and December 31, 2000
included $25 million that was pledged to PNC in connection with our Credit
Facility. The provisions of the Credit Facility require us to maintain at least
$30 million in cash and cash equivalents, including $25 million that we are
required to pledge to PNC. During the first nine months of 2001, we repaid the
$44.7 million balance of the Credit Facility using cash and cash equivalents
generated from operations and proceeds from the sales of our investments in
Speechworks stock, and our investments in PTI and iProcess. Effective October
1, 2001, our Credit Facility with PNC Bank was renewed and amended ("Second
Amendment") through July 31, 2003.

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<PAGE>

   At September 30, 2001, we had $20 million outstanding on a Convertible
Promissory Note (as amended, the "GE Note") to GE Capital Equity Investments,
Inc. ("GE Capital"). The entire unpaid 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. In conjunction with the Second
Amendment to the PNC Credit Facility, we amended the GE Note effective October
1, 2001, to include all revised covenants and provisions of the Second
Amendment. As part of the Amendment, we also paid down $10 million on the GE
Note on October 1, 2001. The current outstanding principal amount is $10
million. At September 30, 2001, the conversion price of the note exceeded the
closing price of our Common Stock.

   On September 24, 2001, itiliti, Inc. our majority owned subsidiary in the
Emerging eServices segment successfully completed at $4.0 million bridge
financing loan. Interest on the loan is to be accrued at 12% per year and is to
be paid on September 24, 2002. Proceeds from the loans were provided from a
combination of customers of itiliti and strategic investors. Proceeds from the
loans are to be used only for general operating purposes and product
development. Currently, these funds are reported as cash and cash equivalents
on our balance sheet. These loans will automatically convert to equity upon
completion of a $1.0 million round of equity financing on or before September
24, 2002.

   If an equity round does not occur on or before September 24, 2002, itiliti
is required to pay each investor a premium equal to the principal amount of
each investor's note. As part of the financing, each investor received warrant
coverage equal to 25% of their loan, with an exercise price equal to 75% of the
price per share in the equity financing. We contributed $500,000 as part of
this Bridge Loan financing. Under the terms of the Second Amendment with PNC
Bank, we are prohibited from contributing any additional funds to ititliti. We
have not guaranteed the principal premium to the investor's if an equity round
of financing does not occur within the time specified.

   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 $3.5 million over the twelve-month
period ending September 30, 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, and incubations. We believe
that our operating expense needs for all of our existing operations and
investments for the twelve months ending September 30, 2002 can be met through
a combination of operating cash flow, proceeds from the sale of some of our
publicly-traded venture investments, available cash balances and unused
borrowings under the Credit Facility. Our ability to incubate new companies
will be entirely dependent on the amount of excess cash generated from our
operating companies. 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 Loss 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.

Recently-Issued Accounting Pronouncements

   In July 2001, the Financial Accounting Standards Board issued Statements of
Financial Accounting No. 142, "Goodwill and Other Intangible

                                       27
<PAGE>

Assets" ("SFAS 142"), which amend Accounting Principles Board ("APB") Opinion
No. 16, "Business Combinations" and supercede APB Opinion No. 17, "Intangible
Assets". SFAS 142 changes the accounting for intangible assets. We will adopt
SFAS 142 on January 1, 2002. We are not permitted to adopt SFAS 142 before
January 1, 2002. We will evaluate goodwill resulting from our prior
acquisitions for impairment at least annually. We are currently reviewing SFAS
142 to determine their financial statement impact. Goodwill amortization
totaled $0.8 million and $2.5 million for the three- and nine-month periods,
respectively, ended September 30, 2001. Goodwill amortization totaled $1.6
million and $4.9 million for the three- and nine-month periods ended September
30, 2001, respectively, on our equity investments.

   SFAS No. 143 addresses financial accounting and reporting for obligations
associated with the retirement of tangible long-lived assets and the associated
asset retirement costs, it applies to legal obligations associated with the
retirement of long-lived assets that result from the acquisition, construction,
development and/or the normal operation of a long-lived asset. We are required
to adopt this standard on January 1, 2003 and are preparing a plan for
implementation.

   In August 2001, the Financial Accounting Standards Board issued SFAS No. 144
"Accounting for the Impairment of Disposal of Long-lived Assets." SFAS No. 144
addresses financial accounting and reporting for the impairment or disposal of
long-lived assets. The Company is required to adopt this standard in fiscal
years ending after December 15, 2001 and are preparing a plan for
implementation.

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 September 30, 2001, we had
one outstanding contract for the sale by the Company of 7 million Canadian
dollars at an exchange rate of 1.581 (US $ 4,427,577). When the contract
matures on December 31, 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 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits:

   None.

(b) Reports on Form 8-K:

   None.

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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

November 14, 2001                         /s/ Sunil Wadhwani
                                          -------------------------------------
                                          Sunil Wadhwani
                                          Co-Chairman of the Board of
                                           Directors,
                                          Chief Executive Officer, and
                                           Director

November 14, 2001                         /s/ Michael Zugay
                                          -------------------------------------
                                          Michael Zugay
                                          Senior Vice President, Chief
                                           Financial Officer

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