UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, DC 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION
13 OR 15(d) OFTHE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended
September 30, 2008

|**Commission file number
      0-20943**                            
|--------------------------------------------------------------------
|INTELLIGROUP,
      INC.                                            
|                                                                    
|(Exact Name of Registrant as Specified In Its
  Charter)            
|                                                                    
|New Jersey                                                          
|                                                                    
|(State or
      Other Jurisdiction of Incorporation or Organization)
|                                                                    
|**5 Independence Way, Suite 220,
      Princeton, New Jersey**      
|                                                                    
|(Address of
      Principal Executive Offices)                      
|                                                                    
|**(646) 810-7400**                                                  
|                                                                    
|(Registrants Telephone Number, Including Area
  Code)              

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 o

Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer or a smaller reporting company. See the definitions of large accelerated
filer accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act.

|Large
      accelerated filer:  o | Accelerated
      filer:  o | Non-accelerated
      filer:  o | Smaller Reporting
      Company  x
|--------------------------------- | --------------------------- | ------------------------------- | ----------------------------------

Indicate by check mark whether the
registrant is a shell company (as defined in Exchange Act Rule
12b-2).

Yes o No x

|Indicate the
      number of shares outstanding of each of the registrants classes of common
      stock, as of November 7, 2008:
|----------------------------------------------------------------------------------------------------------------------------------
|Class                                                                                                                             
|                                                                                                                                  
|Common Stock,
      $.01 par value                                                                                                

1

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TABLE OF CONTENTS

|                              |  |                                                                                                                | Page
|----------------------------- |  | -------------------------------------------------------------------------------------------------------------- | ----
|PART I. FINANCIAL INFORMATION | 
|                              |  |                                                                                                                |     
|Item 1.                       |  | Financial Statements                                                                                           |     
|                              |  |                                                                                                                |     
|                              |  | Consolidated Balance Sheets as of September 30, 2008 (un audited)
      and December 31, 2007                  | 4   
|                              |  |                                                                                                                |     
|                              |  | Condensed Consolidated Statements of Operations and Comprehensive
      Income (Loss) for the Nine months and  | 5   
|                              |  | Three Months
      Ended September 30, 2008 and 2007 (un
      audited)                                        |     
|                              |  |                                                                                                                |     
|                              |  | Consolidated Statements of Cash Flows for the Nine months Ended
      September 30, 2008 and 2007 (un audited) | 6   
|                              |  |                                                                                                                |     
|                              |  | Notes to Condensed Consolidated Financial Statements                                                           | 7   
|                              |  |                                                                                                                |     
|Item 2.                       |  | Managements Discussion and Analysis of Financial Condition and
      Results of Operations                    | 16  
|                              |  |                                                                                                                |     
|Item 3.                       |  | Quantitative and Qualitative Disclosures About Market Risk                                                     | 24  
|                              |  |                                                                                                                |     
|Item 4.                       |  | Controls and Procedures                                                                                        | 24  
|                              | 
|PART II. OTHER INFORMATION    | 
|                              |  |                                                                                                                |     
|Item 1.                       |  | Legal Proceedings                                                                                              | 25  
|                              |  |                                                                                                                |     
|Item 1a.                      |  | Risk Factors                                                                                                   | 25  
|                              |  |                                                                                                                |     
|Item 4                        |  | Submission of Matters to a Vote of Security Holders                                                            | 25  
|                              |  |                                                                                                                |     
|Item 6.                       |  | Exhibits                                                                                                       | 26  
|                              |  |                                                                                                                |     
|Signatures                    |  |                                                                                                                | 29  

2

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FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q
contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
Forward-looking statements include, among other things, business strategy and
expectations concerning industry conditions, market position, future operations,
margins, profitability, liquidity and capital resources. Forward-looking
statements generally can be identified by the use of terminology such as may,
will, expect, intend, estimate, anticipate or believe or similar
expressions or the negatives thereof. These expectations are based on
managements assumptions and current beliefs based on currently available
information. Although the Company believes that the expectations reflected in
such statements are reasonable, it can give no assurance that such expectations
will be correct. You are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this quarterly
report on Form 10-Q and the Company does not have any obligation to update the
forward looking statements. The Companys operations are subject to a number of
uncertainties, risks and other influences, many of which are outside its
control, and any one of which, or a combination of which, could cause its actual
results of operations to differ materially from the forward-looking statements.
Important factors that could cause actual results to differ materially from its
expectations are disclosed in Part I, Item 2, Managements Discussion and
Analysis of Financial Condition and Results of Operations, and listed under
Item A Risk Factors in our annual report on Form 10-K for the year ended
December 31, 2007 filed with the Commission on March 31, 2008 and elsewhere in
this quarterly report on Form 10-Q.

3

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PART I FINANCIAL STATEMENTS

ITEM 1.

INTELLIGROUP, INC.CONSOLIDATED
BALANCE SHEETS(Dollars in thousands except par value)

|                                                                                               |  | September 30 |            | December 31
|---------------------------------------------------------------------------------------------- |  | ------------ | ---------- | -----------
|                                                                                               |  | 2008         |            | 2007       
|                                                                                               |  | (unaudited)  |            |            
|ASSETS                                                                                         |  |              |            |            
|CURRENT
      ASSETS                                                                           |  |              |            |            
|Cash
      and cash equivalents                                                                |  | $            | 8,737      |            
|Accounts receivable, less allowance for doubtful accounts of $1,612
      and $1,240 at        |  |              |            |            
|September 30, 2008 and December 31, 2007, respectively                                         |  |              | 22,320     |            
|Unbilled services, less allowance for doubtful accounts of $911 as
      at September 30,      |  |              |            |            
|2008
      and December 31, 2007                                                               |  |              | 16,126     |            
|Prepaid expenses & taxes                                                                       |  |              | 1,841      |            
|Deferred tax asset, current portion                                                            |  |              | 701        |            
|Other current assets                                                                           |  |              | 1,043      |            
|Total current assets                                                                           |  |              | 50,768     |            
|Property and equipment, net                                                                    |  |              | 4,315      |            
|Goodwill and Intangibles                                                                       |  |              | 2,512      |            
|Restricted Cash & Investments                                                                  |  |              | 3,983      |            
|Deferred taxes and other assets                                                                |  |              | 2,779      |            
|                                                                                               |  |              |            |            
|Total Assets                                                                                   |  | $            | 64,357     |            
|                                                                                               |  |              |            |            
|LIABILITIES AND SHAREHOLDERS' EQUITY                                                           |  |              |            |            
|CURRENT
      LIABILITIES                                                                      |  |              |            |            
|Line
      of credit borrowings                                                                |  | $            | 2,852      |            
|Accounts payable                                                                               |  |              | 4,397      |            
|Accrued payroll and related taxes                                                              |  |              | 11,759     |            
|Accrued expenses and other current
      liabilities                                           |  |              | 5,844      |            
|Deferred revenue                                                                               |  |              | 1,287      |            
|Tax Payable                                                                                    |  |              | 1,287      |            
|Current portion of obligations under capital lease                                             |  |              | 226        |            
|Total current
      liabilities                                                                |  |              | 27,652     |            
|                                                                                               |  |              |            |            
|Obligations under capital lease, net of current portion and long
      term debt               |  |              | 253        |            
|Deferred
      revenue, net of current portion                                                 |  |              | 524        |            
|Other long-term liabilities                                                                    |  |              | 1,200      |            
|Total
      Liabilities                                                                        |  |              | 29,629     |            
|                                                                                               |  |              |            |            
|Commitments and contingencies                                                                  |  |              |            |            
|                                                                                               |  |              |            |            
|SHARE HOLDERS' EQUITY                                                                          |  |              |            |            
|Preferred stock, $.01 par value, 5,000,000 shares authorized, none
      issued or outstanding |  |              |           |            
|Common stock, $.01 par value, 50,000,000 shares authorized and
      42,172,000 shares         |  |              |            |            
|issued and outstanding at September 30, 2008 and 42,160,000 shares
      issued and            |  |              |            |            
|outstanding at December 31, 2007.                                                              |  |              | 421        |            
|Additional paid-in capital                                                                     |  |              | 71,927     |            
|Accumulated deficit                                                                            |  |              | (35,095    | )          
|Accumulated other comprehensive income                                                         |  |              | (2,525     | )          
|Total shareholders equity                                                                     |  |              | 34,728     |            
|                                                                                               |  |              |            |            
|Total liabilities and shareholders
      equity                                               |  | $            | **64,357** |            

See accompanying notes

4

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INTELLIGROUP,
INC.CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)(UNAUDITED)(Dollars in
thousands except per share data)

|                                             |  | NINE MONTHS ENDED |         | THREE MONTHS ENDED
|-------------------------------------------- |  | ----------------- | ------- | ------------------
|                                             |  | SEPTEMBER 30,     |         | SEPTEMBER 30      
|                                             |  | **2008**          |         | 2007              
|Revenue                                      |  | $                 | 119,797 |                   
|Cost of
      revenue                        |  |                   | 82,453  |                   
|Gross profit                                 |  |                   | 37,344  |                   
|                                            
|Selling, general and administrative expenses |  |                   | 27,466  |                   
|Depreciation and
      amortization          |  |                   | 1,685   |                   
|Total operating expenses                     |  |                   | 29,151  |                   
|Operating Income                             |  |                   | 8,193   |                   
|Interest Income / (expense), net             |  |                   | (168    | )                 
|Other income /
      (expense)               |  |                   | (1,236  | )                 
|Income before income tax provision           |  |                   | 6,788   |                   
|Provision for
      income taxes             |  |                   | 1,094   |                   
|Net income/(loss)                            |  | $                 | 5,694   |                   
|                                            
|Income/(Loss) per share:                     |  |                   |         |                   
|Basic net income/(loss) per share            |  | $                 | 0.14    |                   
|Diluted net income/(loss) per share          |  | $                 | 0.13    |                   
|                                            
|Weighted average number of common shares     |  |                   |         |                   
|outstanding  basic                          |  |                   | 42,160  |                   
|Weighted average number of common shares     |  |                   |         |                   
|outstanding  diluted                        |  |                   | 42,439  |                   
|                                            
|Comprehensive income                         |  |                   |         |                   
|Net income/(loss)                            |  | $                 | 5,694   |                   
|Other comprehensive income /(loss) -         |  |                   |         |                   
|currency translation adjustments             |  | $                 | (5,158  | )                 
|                                            
|Comprehensive income                         |  | $                 | 536     |                   

See accompanying notes.

5

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INTELLIGROUP,
INC.CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS(UNAUDITED)(in thousands)

|                                                                                                | NINE MONTHS ENDED SEP 30
|----------------------------------------------------------------------------------------------- | ------------------------
|                                                                                                | 2008                    
|Cash flows from operating activities:                                                           |                         
|Net Income / (loss)                                                                             | $                       
|Adjustments to reconcile net loss to net cash provided by (used in)
      operating activities: |                         
|Depreciation and amortization                                                                   |                         
|Provision for doubtful accounts and advances                                                    |                         
|Stock compensation expense                                                                      |                         
|Exchange (gain) loss                                                                            |                         
|Deferred taxes                                                                                  |                         
|Changes in operating assets and liabilities:                                                    |                         
|Accounts receivable                                                                             |                         
|Unbilled services                                                                               |                         
|Prepaid expenses and other current assets                                                       |                         
|Other assets                                                                                    |                         
|Restricted Cash                                                                                 |                         
|Accounts payable                                                                                |                         
|Accrued payroll and related taxes                                                               |                         
|Accrued expenses and other current liabilities                                                  |                         
|Deferred revenue and advanced payments                                                          |                         
|Income taxes payable                                                                            |                         
|Other long-term liabilities                                                                     |                         
|Net cash provided by operating activities                                                       | $                       
|                                                                                                |                         
|Cash flows from investing activities:                                                           |                         
|Purchase of property and equipment                                                              | $                       
|Proceeds from sale of equipment                                                                 |                         
|Purchases of investments                                                                        |                         
|Proceeds from sale of Investments                                                               |                         
|Acquisition of businesses                                                                       |                         
|Net cash used in investing activities                                                           | $                       
|Cash flows from financing activities:                                                           |                         
|Principal payments under capital leases                                                         | $                       
|Proceeds from exercise of stock options                                                         |                         
|Net
      change in line of credit borrowings                                                   |                         
|Net cash used in financing activities                                                           | $                       
|Effect of foreign currency exchange rate changes on
      cash                                  | $                       
|                                                                                               
|Net increase (decrease) in cash and cash equivalents                                            |                         
|Cash and cash equivalents - beginning of year                                                   | $                       
|Cash and cash equivalents - end of the period                                                   | $                       

See accompanying notes.

6

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INTELLIGROUP,
INC.NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED)September 30, 2008 AND 2007

NOTE 1-BASIS OF PRESENTATION

The
condensed consolidated financial statements and accompanying financial
information as of September 30, 2008 and for the three and nine months ended
September 30, 2008 and 2007 are unaudited and, in the opinion of management,
include all adjustments (consisting only of normal recurring adjustments) which
the Company considers necessary for a fair presentation of the financial
position of the Company at such dates and the operating results and cash flows
for those periods. The unaudited condensed consolidated financial statements
included herein have been prepared in accordance with accounting principles
generally accepted in the United States of America and the instructions of Form
10-Q and Rule 10-01 of Regulation S-X. Pursuant to accounting requirements of
the Securities and Exchange Commission applicable to quarterly reports on Form
10-Q, the accompanying unaudited condensed consolidated financial statements and
these notes do not include all disclosures required by accounting principles
generally accepted in the United States of America for audited financial
statements. Accordingly, these statements should be read in conjunction with the
accounting policies and Notes to Consolidated Financial Statements included in
the Companys consolidated financial statements filed on Form 10-K for the year
ended December 31, 2007.

The
amounts for the December 31, 2007 balance sheet have been extracted from the
audited consolidated financial statements included in our annual report on Form
10-K for the year ended December 31, 2007.

The
results of the Companys operations for the three and nine months ended
September 30, 2008 are not necessarily indicative of the results of operations
to be expected for the full year ending December 31, 2008.

NOTE 2-SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES

***Earnings (loss) per
Common Share***

Basic net
income (loss) per share (EPS) is computed using the weighted average number of
common shares outstanding for the period. Diluted earnings per share include
additional dilution from potential common stock, such as stock issuable pursuant
to the exercise of stock options. Potential common stock is not included in the
computation of diluted earnings per share when the exercise price of the
outstanding options exceeds the current market value or the Company reports a
loss because to do so would be anti-dilutive for the periods presented.

For the
three months ended September 30, 2008 and 2007, respectively, options to
purchase 1,291,054 and 1,404,198 shares of common stock were not included in the
computation of diluted earnings (loss) per share because inclusion would have
been anti-dilutive.For the nine months ended September 30, 2008 and 2007, respectively,
options to purchase, 335,138 and 2,048,372 shares of common stock were not
included in the computation of diluted earnings (loss) per share because
inclusion would have been anti-dilutive.

***Derivative Instruments***

The
Company has entered into foreign currency derivative contracts to manage a
portion of its foreign currency risk related to U.S. Dollar denominated asset
balances at our Indian subsidiary. The foreign currency derivative contract is
marked-to-market and recorded at fair value with unrealized gains and losses
reported along with foreign currency gains or losses in the caption other
income (expense), on the Companys consolidated statements of operations and
comprehensive income (loss). During the three months ended September 30, 2008,
the Company entered into foreign currency forward contracts totaling $4.80
million to sell US dollars for Indian Rupees. As of September 30, 2008, a total
of $25 million of notional amounts under option contracts and $12.55 million
under forward contracts remain and are expected to be settled by May 2010. These
contracts are expected to be settled monthly over the period until the maturity
date. The Company has an option to settle its option contracts in the event the
contracted rates are more favorable than the prevalent spot rates.

At September 30, 2008, summary
information about the instruments is as follows.

|                     |  | Option
      Contracts          |  | Forward
      Contracts     
|-------------------- |  | ------------------------------- |  | ----------------------------
|Notional Amount      |  | $25 million                     |  | $12.55 million              
|Rates                |  | INR 39.70 to
      43.45        |  | INR 43.21 to
      44.93    
|Effective date       |  | 05/18/07, 11/28/07 and 01/17/08 |  | 6/5/2008,6/6/08,6/30/2008,  
|                     |  |                                 |  | 8/14/2008 and 8/20/2008     
|Maturity
      Dates |  | 10/28/2008 to
      05/26/10    |  | 12/30/2008 to
      12/30/09
|Fair Value           |  | $ (2.4) million                 |  | $ (0.8) million             

***Income Taxes***

The
Company records tax expense/benefit based upon the taxable income/loss recorded
in each tax jurisdiction. The Company recorded an income tax expense of $0.5
million on a pretax income of $3.2 million for the three months ended September
30, 2008 as opposed to an income tax expense of $0.2 million on pretax income of
$2.8 million for the three months ended September 30, 2007. The Companys
effective tax rate reflects the impact of earnings in various tax jurisdictions
as well as historical losses incurred in certain of those jurisdictions.

The
Companys India subsidiary received tax assessments for the fiscal years ended
March 31, 1998 to 2003 challenging the tax exemptions of certain revenue earned
and disallowing certain expenses. The assessments demanded an additional tax of
INR 30.1 million (or approximately $0.6 million). The amounts were deposited by
the Company under protest and were fully reserved for. The Company is under
litigation in respect of these assessments and received favorable judgment
during 2007 for the fiscal years ended March 31, 1998 through March 31, 2000.
The judgment refunded approximately $0.5 million of the amount deposited. The
Company expects a similar judgment for the remaining of the fiscal years. While
processing the above refund an amount of INR 2.5 million (or approximately $0.1
million) for the fiscal year ended March 31, 2000 had been deducted by the tax
authorities challenging certain tax exemptions that had earlier been allowed to
the Company. The Company has appealed against this order and expects a favorable
decision. This has however, been fully reserved for as at September 30, 2008.

U.S. and Indian transfer pricing
regulations require that any international transaction involving associated
enterprises be at an arms-length price. Transactions among the Companys
subsidiaries and the Company may be required to satisfy such requirements.
Accordingly, the Company determines the pricing among its associated enterprises
on the basis of detailed functional and economic analysis involving benchmarking
against transactions among entities that are not under commoncontrol. If the applicable income tax authorities review any
of the Companys tax returns and determine that the transfer price applied was
not appropriate, the Company may incur increased tax liability, including
accrued interest and penalties.

7

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INTELLIGROUP,
INC.NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED)September 30, 2008 AND 2007

NOTE 2-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

During
the second quarter of 2008, the company received an assessment order for the
fiscal year ending March 31, 2005, challenging application of some of its Indian
subsidiarys transfer pricing policies. No additional tax demands have been made
by the India Income Tax Authorities as yet. The Indian tax authorities are
examining income tax returns for other tax years.

Based on
advice from its Indian tax advisors, the facts underlying its position and its
experience with these types of assessments, the Company believes that the
probability of loss is remote and accordingly has not accrued any amount with
respect to these matters its unaudited condensed consolidated financial
statements.

***Goodwill and Intangibles***

As
reported in Note 3 to the Companys financial statements in its annual report on
Form 10-K for the year ended December 31, 2007, on October 1, 2007, the
Companys wholly owned subsidiaries Intelligroup Europe Ltd and Intelligroup
Asia Pvt Ltd acquired certain assets including without limitation customer
contracts, fixed assets and employees from ISG Novasoft Technologies Limited
(Novasoft India) and Novasoft Information Technology(Europe) Ltd., (Novasoft Europe)
for an aggregate purchase price of three million one hundred thousand dollars
($3,100,000) ("Novasoft Acquisition").The Company applied the purchase
method of accounting for the acquisition. It does not amortize goodwill but
instead tests goodwill at the reporting unit level for impairment at least
annually or as circumstances warrant. If impairment is indicated, a write down
to fair value (normally measured discounting estimated cash flows) is recorded.
Other intangibles represent primarily customer relationships which are amortized
on a straight line basis over their estimated useful lives.

As of September 30, 2008 the Company
completed calculations and finalized its purchase price allocation relating to
the acquisition as follows:.

Particulars
    
    Assets
    
    LiabilitesCash
    
    $75Fixed Assets
    
    4Intangibles
    
    1,289Goodwill
    
    1,865Accrued Payroll
    
    
    
    $91Acquisition Expenses
      Payable
    
    
    
    42Payable to lender
    
    
    
    3,100Total
    
    $3,233
    
    $3,233


As a
result of the final allocation, approximately $1.4 million has been reallocated
from intangibles to goodwill and the amortization of intangibles has been
adjusted by approximately $0.3 million for the nine months ended September 30,
2008.

The following unaudited proforma
statements of operations reflect the results of operations as though the
acquisition had been completed at the beginning of the year 2006.

in thousands except per
      share data2007
    2006Revenues
    $148,566
    $128,509Net Income/ (Loss) after tax
    $3,825
    ($2,892)Income / (Loss) per ShareBasic - outstanding Shares
    $0.09
    ($0.07)Dilted- outstanding Shares
    $0.09
    ($0.07)Weighted Average Shares outstanding-
      Basic
    42,026
    40,179Weighted Average Shares
      outstanding- Diluted
    42,115
    40,179


8

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INTELLIGROUP, INC.NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED) SEPTEMBER 30, 2008 AND 2007

NOTE 2-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

Pension Plan Liability

The
Company provides its employees in India with benefits under a defined benefit
pension plan, referred to as the Gratuity Plan. The Gratuity Plan provides a
lump sum payment to vested employees on retirement or on termination of
employment in an amount based on the respective employees salary and years of
employment. The Company determines its liability under the Gratuity Plan by
actuarial valuation using the projected unit credit method. Under this method,
the Company determines liability based upon the discounted value of salary
increases until the date of separation arising from retirement, death,
resignation or other termination of services. Critical assumptions used in
measuring the plan expense and projected liability under the projected unit
credit method include the discount rate, expected return on assets and the
expected increase in the compensation rates. The Company evaluates these
critical assumptions at least annually. The Company periodically evaluates and
updates other assumptions used in the projected unit credit method involving
demographic factors, such as retirement age and turnover rate, to reflect its
experience. The mortality rates used are consistent with those published by the
Life Insurance Corporation of India.

The
discount rate enables the Company to state expected future cash flows at a
present value on the measurement date. The discount rate used is equal to the
yield on high quality fixed income investments in India at the measurement date.
The expected rate of return on plan assets is estimated based on available
market information, Indian law which regulates such investments and historical
returns. The measurement date for these employee retirement benefits coincides
with reporting date of the financial statements.

Share-Based Compensation Plans

The
Companys share-based compensation plans are described in Note 7. The Company
adopted the provisions of Statement of Financial Accounting Standards No. 123
(Revised 2004), Share-Based Payment, (SFAS No. 123R) on January 1, 2006,
using the modified prospective transition method.

There was
one share-based payment award granted in the three months ended September 30,
2008. The Company recognizes compensation expense for all share-based payment
awards based on the grant date fair value estimated in accordance with the
provisions of SFAS No. 123R.

The fair
value of each option award is estimated on the date of grant using the
Black-Scholes option valuation model. The Company recognizes the fair value of
each option as compensation expense ratably using the straight-line attribution
method over the service period (generally the vesting period). The Black-Scholes
model incorporates the following assumptions:

- Expected volatility  the Company estimates the
  volatility of common stock at the date of grant using a combination of
  unadjusted historical volatility, and
  historical volatility adjusted for periods of unusual stock price
  activity.
- Expected term  the Company estimates the expected
  term of options granted based on a combination of vesting schedules, life of
  the option, historical experience and in cases where the Company does not have
  significant historical experience, the simplified method of determining
  expected term outlined in Staff Accounting Bulletin 107 is used.
- Risk-free interest rate  the Company estimates
  the risk-free interest rate using the U.S. Treasury yield curve in effect at
  the time of grant for periods equal to the
  expected life of the options.
- Dividends  the Company uses an expected dividend
  yield of zero since it has never declared or paid any dividends on its capital
  stock. The Company intends to retain any earnings to fund future growth and
  the operation of its business, and, therefore does not anticipate paying any
  cash dividends in the foreseeable future.

Additionally, the Company estimates
forfeitures at the time of grant and revises those estimates in subsequent
periods if actual forfeitures differ from those estimates. It uses a combination
of historical data, demographic characteristics and other factors to estimate
pre-vesting option forfeitures and record share-based compensation expense only
for those awards that are expected to vest. SFAS No. 123R requires the cash
flows resulting from the tax benefits for tax deductions in excess of the
compensation expense recorded for those options to be classified as financing
cash flows. There were 3 options exercised for which 11,725 shares were issued
during the three months ended September 30, 2008 and there were 11 options
exercised for which 112,500 shares were issued during the three months ended
September 30, 2007.

NOTE 3-LINE OF CREDIT

On May
22, 2008, the Company and its wholly-owned subsidiary Empower, Inc. closed out
the existing $15 million line of credit with Steel City Capital Funding. The
Company entered into a revolving credit loan and security agreement (Credit
Agreement) with HSBC Bank, (the Bank). The Credit Agreement is comprised of a
three year revolving line of credit pursuant to which the Company can borrow up
to $10.0 million at the Banks Base Rate (as defined in the Credit Agreement) of
5.0% as of September 30, 2008, minus 0.85% percent. The credit facility is
collateralized by substantially all of the assets of the United States based
operations and all subsidiary stock (not to exceed 65% of the Equity Interests
of any Foreign Subsidiary). The maximum borrowing availability under the Credit
Agreement is based upon a percentage of eligible billed and unbilled accounts
receivable. The Credit Agreement provides for certain financial covenants that
shall only be tested as of the end of any fiscal quarter.

The Company was in compliance with
the applicable financial covenants of the loan agreement related to the Credit
Agreement as of September 30, 2008.

As of
September 30, 2008, the Company had $0.1 million outstanding borrowings under
the Credit Agreement. The Company estimates undrawn availability under the
Credit Facility to be $9.9 million as of September 30, 2008.

On
October 1, 2007, the Companys subsidiaries Intelligroup Europe Ltd (IGE) and
Intelligroup Asia Pvt Ltd. (IGA) acquired certain assets including without
limitation customer contracts, fixed assets and employees from Novasoft
Information Technology Ltd., (Novasoft Europe) and ISG Novasoft Technologies
Limited (Novasoft India) for an aggregate purchase price of three million one
hundred thousand dollars ($3,100,000) ("Novasoft Acquisition").

9

---

INTELLIGROUP, INC.NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED) SEPTEMBER 30, 2008 AND 2007

NOTE 3-LINE OF CREDIT (CONTINUED)

In order
to finance a significant portion of the purchase price for the Novasoft
Acquisition, Intelligroup Europe Limited (IGE) received a loan of 1,500,000
from Lloyds Bank PLC Lloyds Bank TBS during 2007. This loan is secured by a
stand by letter of credit from Citibank N.A. (Citibank), for which
Intelligroup Asia Private Limited (IGA) has placed a hundred and ten percent
margin money deposits with Citibank. The loan is payable in three annual
installments of₤500,000 starting October 2008, with interest payable monthly at the rate
of 6.75% APR. The Company repaid this loan in entirety during the fourth quarter
of 2008.

NOTE 4-RESTRICTED CASH AND INVESTMENTS

During
October 2007, Intelligroup Asia Private Limited (IGA), a wholly owned
subsidiary of Intelligroup Inc., placed a hundred and ten percent margin money
deposits with Citibank N.A (Citibank) against a stand by letter of credit issued
by Citibank to Lloyds Bank TSB, London in connection with the Novasoft
Acquisition. This margin money deposit has been classified under restricted cash
on the balance sheet as on September 30, 2008. In addition IGA has few
investments primarily in non convertible debentures which it has placed with
Citibank as a lien against the derivative contracts which IGA has in place with
Citibank. The various components of restricted cash and investments consist of
the following as on September 30, 2008

| | **Restricted asset** |  | Restricted
      against                             |  | in
      thousands
| | -------------------- |  | ---------------------------------------------------- |  | ------------------
| | Fixed
      Deposit  |  | Letter
      of credit to Lloyds Bank TSB            |  | $1,051            
| | Investments          |  | Letter of credit to
      Lloyds Bank TSB            |  | 1,930             
| | Fixed
      Deposit  |  | Lien
      against derivative contracts              |  | 736               
| | Fixed
      Deposit  |  | Against various
      statutory and customer related |  | 266               
| |                      |  | compliances                                          |  |                   
| | Total                |  |                                                      |  | $3,983            

NOTE 5-RELATED PARTY TRANSACTIONS

Effective
August 1, 2005, Intelligroup Asia Pvt. Ltd. (IGA) entered into an agreement to
lease certain premises for certain of the Companys India operations from iLabs
Hyderabad Technology Center Pvt. Ltd. (iLabs), a party with which two members
of the Companys Board of Directors, Srini Raju and Sandeep Reddy, are
affiliated. The terms of the lease agreement provide for, among other things:
(1) a minimum lease period of five years with an option for two three-year
renewal periods; (2) payment of a security deposit equivalent to nine (9)
months rent in the amount of 15.3 million Indian rupees (approximately
$323,000); (3) payment of monthly lease fees in the amount of 1.7 million Indian
rupees (approximately $39,000), subject to yearly five percent (5%) escalation;
and (4) monthly operations and maintenance fees of 0.3 million Indian rupees
(approximately $7,000). Rent paid for the three months ended September 30, 2008
towards such lease was 7.4 million rupees (approximately $170,000). There are no
advance lease rentals as of September 30, 2008.

NOTE 6-LITIGATION

There is
no pending litigation to which the Company is a party or to which any of its
property is subject that would have a material impact on its consolidated
financial condition, results of operations or cash flows in the event we were
unsuccessful in such litigation. However the Company cannot predict with
certainty the outcome of any litigation or the potential for future litigation
and any such matters could adversely affect its financial condition, results of
operations, cash flows and business.

NOTE 7-SHAREHOLDERS EQUITY

**Share-Based Compensation
Plans**

The
Company has four share-based compensation plans that reserve common shares for
issuance to key employees, consultants and directors, as described below. The
compensation cost that has been charged against income for those plans was $0.8
million for the nine months ended September 30, 2008. The Company did not
recognize income tax benefit in the condensed consolidated statement of
operations and comprehensive loss for the first nine months of 2008, due to its
history of net operating losses. Three options were exercised and 11,725 shares
were issued during the nine months ended September 30, 2008.

10

---

INTELLIGROUP, INC.NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED) SEPTEMBER 30, 2008 AND 2007

NOTE 7-SHAREHOLDERS EQUITY (CONTINUED)

*Stock
Options:***

The 2004
Equity Incentive Award Plan (2004 Plan) was approved by the Companys Board of
Directors on April 5, 2004 and adopted by the Companys shareholders on June 8,
2004. The maximum number of shares of Common Stock reserved for issuance under
the 2004 Plan shall be equal to 1,600,000, plus the number of shares of Common
Stock which are or become available for issuance under the Companys 1996 Stock
Plan (the Prior Plan), and which are not issued under such plan, which
includes an increase of 500,000 shares pursuant to the third amendment to the
2004 plan which was adopted by the Board of Directors on May 4, 2006 and
approved by the stockholders of the Company on June 8, 2006. Those eligible to
receive stock option grants or stock purchase rights under the 2004 Plan include
employees, non employee Directors and consultants. The Compensation Committee of the Board
of Directors of the Company administers the 2004 Plan. Subject to the provisions
of the 2004 Plan, the administrator of the 2004 Plan has the discretion to
determine the optionees and/or grantees, the type of equity awards to be granted
(incentive stock options and nonqualified stock options, restricted stock, stock
appreciation rights, performance shares, performance stock units, stock
payments, deferred stock, restricted stock units, other stock-based awards, and
performance-based awards), the vesting provisions, the terms of the grants and
such other related provisions as are consistent with the 2004 Plan.

The
exercise price of a stock option may not be less than the fair market value per
share of the Common Stock on the date of grant or, in the case of an optionee
receiving incentive stock option award who beneficially owns 10% or more of the
outstanding capital stock of the Company, not less than 110% of the fair market
value per share on the date of grant. Notwithstanding the foregoing, the
Compensation Committee may in its discretion issue non-qualified stock options
to purchase up to 500,000 shares of Common Stock with an option exercise price
of less than 100% of the fair market value of the Common Stock on the date of
grant. The options terminate not more than ten years from the date of grant,
subject to earlier termination on the optionees death, disability or
termination of employment with the Company, provided however that the term of
any incentive stock options granted to a holder of more than 10% of the
outstanding shares of capital stock may be no longer than five years. Options
are not assignable or otherwise transferable except by will or the laws of
descent and distribution.

The
Compensation Committee may provide that if a Change of Control (as defined in
the 2004 Plan) of the Company occurs and any awards made pursuant to the 2004
Plan are not converted, assumed or replaced by a successor, then all outstanding
awards that are not converted, assumed or replaced may become fully vested and
exercisable. The Compensation Committee, subject to approval of the Board, may
terminate, amend, or modify the 2004 Plan at any time; provided, however, that
stockholder approval must be obtained for any amendment to the extent necessary
or desirable to comply with any applicable law, regulation or stock exchange
rule, to increase the number of shares available under the 2004 Plan, to permit
the Compensation Committee to grant options with an exercise price below fair
market value on the date of grant, or to extend the exercise period for an
option beyond ten years from the date of grant. The 2004 Plan terminates on June
8, 2014 unless terminated earlier by the Companys Board of Directors.

The 1996
Stock Plan (1996 Plan) was adopted by the Board of Directors and approved by
the shareholders of the Company on June 3, 1996, and became effective on July
12, 1996. Those eligible to receive stock option grants or stock purchase rights
under the 1996 Plan include employees, non employee Directors and consultants.
The Compensation Committee of the Board of Directors of the Company administers
the 1996 Plan. Subject to the provisions of the 1996 Plan, the administrator of
the 1996 Plan has the discretion to determine the optionees and/or grantees, the
type of options to be granted (incentive stock options or nonqualified stock
options), the vesting provisions, the terms of the grants and such other related
provisions as are consistent with the 1996 Plan. The exercise price of an
incentive stock option may not be less than the fair market value per share of
the Common Stock on the date of grant or, in the case of an optionee who
beneficially owns 10% or more of the outstanding capital stock of the Company,
not less than 110% of the fair market value per share on the date of grant. The
exercise price of nonqualified stock options granted under the 1996 Plan may not
be less than 85% of the fair market value per share of the Common Stock on the
date of grant or, in the case of an optionee who beneficially owns 10% or more
of the outstanding capital stock of the Company, not less than 110% of the fair
market value per share on the date of grant. The purchase price of shares issued
pursuant to stock purchase rights may not be less than 50% of the fair market
value of such shares as of the offer date of such rights. The options terminate
not more than ten years from the date of grant, subject to earlier termination
on the optionees death, disability or termination of employment with the
Company, provided however that the term of any options granted to a holder of
more than 10% of the outstanding shares of capital stock may be no longer than
five years. Options are not assignable or otherwise transferable except by will
or the laws of descent and distribution. In the event of a merger or
consolidation of the Company with or into another corporation or the sale of all
or substantially all of the Companys assets in which the successor corporation
does not assume outstanding options or issue equivalent options, the Board of
Directors of the Company is required to provide accelerated vesting of
outstanding options. As of June 8, 2004, the Company ceased granting options
under the 1996 Plan.

The 1996
Non-Employee Director Plan was approved by the Board of Directors on June 3,
1996. The shareholders adopted the Companys 1996 Non-Employee Director Stock
Option Plan (the Director Plan) and it became effective on July 12, 1996. The
Director Plan provides for the grant of options to purchase a maximum of 140,000
shares of Common Stock of the Company to non-employee Directors of the Company.
The Board of Directors administers the Director Plan.

In
October and November 2000, the Companys Board of Directors approved grants of
options for equity compensation plans not approved by security holders (the Out
of Plan options). Each of the Out of Plan options vest in four equal semiannual
installments beginning on the first six-month anniversary of the date of grant
and expire on the tenth anniversary of the date of grant. The price of the
options granted pursuant to the Out of Plan options is equal to the fair market
value of the shares on the date of grant.

The fair value of option grants is
estimated on the date of grant using the Black-Scholes option-pricing model
using the following weighted average assumptions:

|                              | Three Months
      Ended |  | Nine Months Ended
|----------------------------- | ------------------------ |  | -----------------
|                              | 30-Sep                   |  | 30-Sep           
|                              | 2008                     |  | 2007             
|Expected Volatility           | 81.51%                   |  | 85.81%           
|Expected
      Lives(years)   | 6.0625                   |  | 6.0625           
|Risk
      free Interest Rate | 3.20%                    |  | 4.34%            
|Expected
      Dividends      | 0%                       |  | 0%               

11

---

INTELLIGROUP, INC.NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED) SEPTEMBER 30, 2008 AND 2007

NOTE 7-SHAREHOLDERS EQUITY (CONTINUED)

The
weighted average grant date fair value of options granted during the three
months ended September 30, 2008 and 2007 was $1.43 and $1.46 respectively and
$1.49 and $1.04 for the nine month ended September 30, 2008 and 2007
respectively.

As of
September 30, 2008, there was $1.4 million of total unrecognized compensation
cost related to the stock options. That cost is expected to be recognized over
the next four years.

The following table summarizes the
share-based compensation expense for stock options that were recorded in
accordance with SFAS No. 123R for the three and nine ended September 30, 2008
and September 30, 2007 (in thousands except per share information):



|                                                   | **Nine Months** |       | **Three Months**
|-------------------------------------------------- | --------------- | ----- | ----------------
|                                                   | Ended           |       | Ended           
|                                                   | Sep 30          |       | Sep 30          
|                                                   | 2008            |       | 2007            
|Cost of
      Revenue                              | $               | 277   |                 
|Selling, general and
      administrative expenses |                 | 515   |                 
|Decrease in net income / Increase to net loss      | $               | 792   |                 
|                                                   |                
|Change
      in income / loss per share:           |                 |       |                 
|Basic                                              | $               | (0.02 | )               
|Diluted                                            | $               | (0.02 | )               

NOTE 8-SEGMENT DATA AND GEOGRAPHIC INFORMATION

The Company operates in one industry
segment, information technology solutions and services.

The Company has four reportable
geographic operating segments, which are organized and managed on a geographical
basis, as follows:

- United States (US)  the largest segment of the
  Company, with operations in the US and Puerto Rico. Includes the operations of
  the Companys US subsidiary, Empower, Inc., and all corporate functions and
  activities. The US and corporate headquarters is located in Princeton, New
  Jersey;
- India  includes the operations of the Company in
  India, including services provided on behalf of other group subsidiaries,
  primarily to the US. The India offices are located in Hyderabad and Bangalore,
  India. A majority of total revenue generated in India is derived from
  providing offshore development and support services to customers through the
  Companys affiliated entities in other parts of the world, but predominantly
  with the United States.
- Europe  includes the operations of the Company in
  Denmark and the United Kingdom. The European offices are located in Milton
  Keynes, United Kingdom and Odense in Denmark
- Japan  includes the operations of the Company in
  Japan. The office is located in Tokyo, Japan.

The CEO has been identified as the
Chief Operating Decision Maker (CODM) because he has final authority over
resource allocation decisions and performance assessment. The CODM regularly
receives certain discrete financial information about the geographical operating
segments, including primarily revenue and operating income, to evaluate segment
performance.

Accordingly, the Companys
consolidated operating results for the three and nine months ended September 30,
2008 and 2007 are presented in the following geographic segments (in thousands):

12

---

INTELLIGROUP, INC.NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED) SEPTEMBER 30, 2008 AND 2007

NOTE 8-SEGMENT DATA AND GEOGRAPHIC INFORMATION
(CONTINUED)

|                                            | United States |        | India |  | Europe |  | Japan  |   | Total
|------------------------------------------- | ------------- | ------ | ----- |  | ------ |  | ------ | - | -----
|Three Months ended September 30, 2008       |               |        |       |  |        |  |        |   |      
|Revenue                                     | $             | 24,338 |       |  | 12,151 |  | 3,347  |   |      
|Operating Income / (Loss)                   |               | 1,592  |       |  | 1,923  |  | 140    |   |      
|Income Tax
      Expense                    |               | 14     |       |  | 282    |  | 160    |   |      
|Net Income / (Loss)                         | $             | 1,670  |       |  | 819    |  | (8     | ) |      
|Three
      Months ended September 30, 2007 |               |        |       |  |        |  |        |   |      
|Revenue                                     | $             | 23,589 |       |  | 10,126 |  | 3,091  |   |      
|Operating Income
      / (Loss)             |               | 601    |       |  | 596    |  | 573    |   |      
|Income Tax Expense                          |               | (211   | )     |  | 393    |  | -      |   |      
|Net Income /
      (Loss)                   | $             | 853    |       |  | 621    |  | 633    |   |      
|                                           
|Nine months ended September 30, 2008        |               |        |       |  |        |  |        |   |      
|Revenue                                     | $             | 69,768 |       |  | 34,936 |  | 11,424 |   |      
|Operating Income / (Loss)                   |               | 2,822  |       |  | 4,579  |  | 693    |   |      
|Income Tax
      Expense                    |               | 59     |       |  | 775    |  | 260    |   |      
|Net Income / (Loss)                         | $             | 3,092  |       |  | 1,832  |  | 558    |   |      
|Property &
      Equipment, net             | $             | 528    |       |  | 2,415  |  | 1,317  |   |      
|Total Assets                                | $             | 20,019 |       |  | 39,012 |  | 4,896  |   |      
|Nine
      months ended September 30, 2007  |               |        |       |  |        |  |        |   |      
|Revenue                                     | $             | 66,036 |       |  | 29,333 |  | 8,672  |   |      
|Operating Income
      / (Loss)             |               | (3,469 | )     |  | 2,592  |  | 708    |   |      
|Income Tax Expense                          |               | (653   | )     |  | 1,284  |  | -      |   |      
|Net Income /
      (Loss)                   | $             | (2,761 | )     |  | 1,316  |  | 781    |   |      
|Property & Equipment, net                   | $             | 522    |       |  | 3,639  |  | 2,372  |   |      
|Total
      Assets                          | $             | 32,664 |       |  | 19,252 |  | 7,971  |   |      

NOTE 9-COMMITMENTS AND CONTINGENCIES

On July 5, 2000, the Company distributed SeraNova
common stock to its shareholders in a transaction that was structured to be and
was reported as a tax-free spin-off pursuant to Section 355 of the Internal
Revenue Code (IRC Section 355). For distributions of stock qualifying under
IRC Section 355, neither the Company nor the Companys shareholders recognize
any gain or income in connection with the transaction for US federal income tax
purposes. The Company and SeraNova executed a Tax Sharing Agreement, dated
January 1, 2000 (Tax Sharing Agreement), whereby SeraNova would indemnify the
Company for any tax liabilities in the event a future transaction of SeraNova
results in the spin-off is being deemed a taxable event. On October 27, 2000,
SeraNova and Silverline Technologies, Inc. announced that they had entered into
an agreement and plan of merger, under which Silverline Technologies, Inc. would
acquire control of SeraNova in exchange for American depository shares of
Silverline. Subsequently, SeraNova and Silverline Technologies, Inc. filed for
Chapter 7 Bankruptcy on August 8, 2003. As a condition to the distribution,
SeraNova management represented that there was no present plan, nor intent to
enter into a subsequent transaction that would disturb the intended taxfree
nature of the distribution.

IRC
Section 355(e) provides that the Company may be required to recognize a gain
equal to the excess of the fair market value of the SeraNova shares distributed
over their tax basis if the distribution is part of a plan pursuant to which one
or more persons acquire 50% or more of SeraNova common stock within two years of
the distribution date. Should the spin-off ultimately be construed as taxable
the resultant tax liability could be in the range of $55 million to $65 million
and related penalties (if assessed) and interest could increase the amount by
$40 million to $50 million as at September 30, 2008, depending on the facts that
ultimately are established. No future benefits would inure to the Company as a
result of imposition of a tax on the SeraNova distribution, and no reserve has
been recorded for this potential tax. However, should such a tax liability be
imposed, the Company may be able to utilize some of its existing net operating
losses to mitigate this tax liability.

***Employment Agreements***

As of
September 30, 2008, the Company had employment agreements with certain of its
executive officers, which provide for minimum payments in the event of
termination for reasons other than just cause. The aggregate amount of
compensation commitment in the event of termination under such agreements is
approximately $1.1 million. In addition, IGA had entered into Severance Packages
totaling approximately $0.6 million with certain former members of the IGA
management team. Pursuant to the terms of the Agreement for Severance Package,
the Severance Package is activated upon the fulfillment of certain events,
including a change in management of the Company or IGA. In April 2005, following
the termination of the Companys Chief Executive Officer, three members of the
IGA management team, each of whom had a Severance Package, resigned. Except as
set forth below, to date, the Company has not received any claim for payment of
the Severance Package. In September 2005, two former members of the IGA
management team sent IGA notices under Section 433 and 434 of the Indian
Companies Act, 1956 for payment of such Severance Package. Such claims have not
been pursued since such initial notice was served, and the Company does not
believe that such severance amount is owed. In the event the Company is
unsuccessful in defending against such claim for payment, the Company would owe
approximately $0.6 million to such individuals.

13

---

INTELLIGROUP, INC.NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED) SEPTEMBER 30, 2008 AND 2007

NOTE 10- RECENT ACCOUNTING
PRONOUNCEMENTS

In
September 2006, the Financial Accounting Standards Board (FAS) issued FAS No.
157, Fair Value Measurements (FAS 157), which defines fair value, establishes
a framework for measuring fair value in generally accepted accounting
principles, and expands disclosures about fair value measurements. SFAS 157 does
not require any new fair value measurements, but provide guidance how to measure
fair value by providing a fair value hierarchy used to clarify the source of
information. SFAS 157-2 which delayed the effective date of SFAS 157 for all non
financial assets and non financial liabilities, except that those are recognized
or disclosed at fair value in the financial statements on a recurring basis (at
least annually ). This FSP partially defers the effective date of Statement 157
to fiscal years beginning after November 15, 2008 and interim periods within
those fiscal years for items within the scope of this FSP. The Company adopted
FAS 157 for all financial assets and liabilities required to be measured at fair
value on a recurring basis, prospectively from January 1, 2008. The application
of FAS 157 for financial instruments which are periodically measured at fair
value did not have any significant impact on earnings nor the financial position
since the fair values of the Companys financial assets and liabilities
(consisting primarily of its foreign exchange option contracts and certain
market securities) are based either on observable market prices or on other
observable inputs.

In February 2007, the FASB issued
FAS No.159, The Fair Value Option for Financial Assets and Financial Liabilities
 including an amendment of FASB 115 (SFAS 159) which allows an entity to
choose to measure certain financial instruments and liabilities at fair value.
Subsequent measurements for the financial instruments and liabilities an entity
elects to fair value will be recognized in earnings and this election is
irrevocable. SFAS 159 also establishes additional disclosure requirements.
FAS159 is effective for the Company beginning January 1, 2008. The Company has
not elected to apply the fair value option to any of its financial instruments.

In
December 2007, the FASB issued FAS No.141 (revised 2007), Business Combinations
(FAS 141R). SFAS 141R establishes principles and requirements for how an
acquirer recognizes and measures in its financial statements the identifiable
assets acquired, the liabilities assumed, any non controlling interest in the
acquiree and the goodwill acquired. SFAS 141R also establishes disclosure
requirements to enable the evaluation of the nature and financial effects of the
business combination. This statement is effective beginning January 1, 2009. The
Company does not believe that there is will be a significant impact on its
financial position or results of operations as a result this pronouncement.

In
December 2007, the FASB issued SFAS No.160, Non Controlling Interests in
Consolidated Financial Statements-an amendment of Accounting Research Bulletin
No.51 (FAS 160). SFAS 160 establishes accounting and reporting standards for
ownership interests in subsidiaries held by the parties other than parent, the
amount of the consolidated net income attributable to the parent and to the non
controlling interest, changes in parents ownership interest, and the valuation
of retained non controlling equity investments when a subsidiary is
deconsolidated. SFAS 160 also establishes disclosure requirements that clearly
identify and distinguish between the interests of the parent and interests of
the non controlling owners. This statement is effective for the Company
beginning January 1, 2009. The Company is currently evaluating the potential
impact of the adoption of FAS 141R on its consolidated financial position,
results of operations or cash flows.

In March
2008, The FASB issued SFAS No.161 Disclosures about Derivative Instruments and
Hedging Activities-an amendment of FASB Statement No.133 (FAS 161). FAS161
enhances disclosures about the Companys derivative and hedging activities and
thereby improves the transparency of financial reporting. This statement is
effective for financial statements issued for fiscal years and interim periods
beginning after November 15, 2008.

In May
2008, The FASB issued SFAS 162  The Hierarchy of Generally Accepted Accounting
Principles. FAS 162 is intended to improve financial reporting by indentifying a
consistent framework, or hierarchy, for selecting accounting principles to be
used in preparing financial statements that are presented in conformity with US
GAAP for non governmental entities. The Company does not believe that there will
be a significant impact on its financial position or results of operations as a
result this pronouncement.

NOTE 11- FINANCIAL INSTRUMENTS

The
Company measures certain financial assets and liabilities at fair value on a
recurring basis, including derivative instruments and investments. The fair
value measurements of these derivative instruments and investments were
determined using the following inputs of Sept 30, 2008:

| |                                       |       |           |           | Fair Value Measurements at
      Reporting Date Using
| | ------------------------------------- | ----- | --------- | --------- | -----------------------------------------------------
| |                                       |       |           |           | Quoted Prices
      in                               
| |                                       |       |           |           | Active Markets for                                   
| |                                       |       |           |           | Identical Assets                                     
| |                                       | Total |           | (Level 1) |                                                      
| | Assets:                               |       |           |           |                                                      
| | Investments (Note
      a)            | $     | 1,930,306 |           | $                                                    
| | Total                                 | $     | 1,930,306 |           | $                                                    
| |                                       |      
| | Liabilities:                          |       |           |           |                                                      
| | Derivative Instruments
      (Note b) | $     | 3,178,962 |           | $                                                    
| | Total                                 | $     | 3,178,962 |           | $                                                    

(a) Included
in restricted cash & investments in the consolidated balance sheets. (Please refer note 4 
Restricted cash & Investments) (b) Included in current
liabilities ($2.4 million) and other long term liabilities ($0.8 million) in the
consolidated balance sheets. (Please refer note 2  Derivative instruments under
Summary of significant accounting policies)

There has
been no change in Level classification during the period ended Sept 30, 2008.

14

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INTELLIGROUP, INC.NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED) SEPTEMBER 30, 2008 AND 2007

NOTE 12- OTHER INCOME/ (EXPENSE)

Other
income/ (expense) results from transaction gains or losses associated with
changes in foreign currency exchange rates, sublease income, dividend income
from investments and other items.

For the
three months ended September 30, 2008 and 2007, the Company recorded transaction
losses of approximately $0.7 million and transaction gains of $0.8 million, as a
result of currency translation on account of currency fluctuations in Asia and
Europe. $1.6 million loss was on account of Companys mark to market accounting
for derivative instruments due to the decline of the value of the Indian Rupee
against the U.S. dollar during the three months ended September, 2008
compensated partially by a gain of $0.9 million recorded on account of foreign
currency revaluation of accounts receivable balances. Additionally, for the
three months ended September 30, 2008 the Company recorded net expense of $0.1
million pertaining to sublease rental income, dividend income and other items
compared with net expense of $6,000 for the three months ended September 30,
2007.

For the nine months ended September
30, 2008 and 2007, the Company recorded transaction losses of approximately $1.7
million and transaction gains of approximately $0.4 million, as a result of
currency translation, primarily as a result of currency fluctuations in Asia and
Europe. Additionally, for the nine months ended September 30, 2008 the Company
recorded sublease income, dividend income and other items of approximately $0.5
million compared with $0.4 million for the three months ended September 30,
2007.

NOTE 13- EMPLOYEE BENEFIT PLANS

The
Gratuity Plan provides a lump sum payment to vested employees on retirement or
on termination of employment in an amount based on the respective employees
salary and years of employment with the Company. Liabilities with regard to the
Gratuity Plan are determined by actuarial valuation. Current service costs for
the Gratuity Plan are accrued in the year to which they relate.

Net gratuity cost includes the
following components:



|                                | Nine Months Ended |     | Three Months Ended
|------------------------------- | ----------------- | --- | ------------------
|                                | **30-Sep**        |     | **30-Sep**        
|                                | **2008**          |     | **2007**          
|Service
      Cost              | $                 | 148 |                   
|Interest Cost                   |                   | 40  |                   
|Actuarial (Gain)
      / Loss   |                   | (50 | )                 
|Expected Return on
      Assets |                   | (0  | )                 
|Net Gratuity
      Cost         | $                 | 138 |                   

NOTE 14- OTHER COMPREHENSIVE INCOME/(LOSS)

The changes in Other Comprehensive
Income (Loss) are mainly due to the foreign currency translation adjustments of
overseas subsidiaries.

For the three months ended September
30, 2008, the Company recorded other comprehensive loss due to translation
adjustment of approximately $2.6 million on account of currency fluctuations in
Asia and Europe. Other comprehensive income of approximately $0.4 million was
recorded for the three month ended September 30, 2007.

For the nine months ended September
30, 2008, the Company recorded other comprehensive loss due to translation
adjustment of approximately $5.2 million on account of currency fluctuations in
Asia and Europe. Other comprehensive income of approximately $2.4 million was
recorded for the nine month ended September 30, 2007.

NOTE 15- SUBSEQUENT EVENTS

On
October 24th 2008, the Board of Directors of the Company approved a share repurchase
program of up to $5,000,000 of the Company's common stock over the next 18
months. The share repurchase program will be funded using the Company's working
capital and authorizes the Company to repurchase shares from time to time
through open market or privately negotiated transactions. The Company also
intends to adopt a Rule 10b5-1 trading plan that will allow the Company to
purchase its shares at times when it ordinarily would not be in the market due
to its internal trading policy. The program will expire on the earlier of (i)
the repurchase of the maximum number of shares under the program, (ii) the 18
month anniversary of the approval of the program or (iii) a determination by the
Board of Directors to discontinue the program. The Company is not obligated to
repurchase shares under the authorization or enter into a Rule 10b5-1 trading
plan and the timing; actual number and value of shares purchased will depend on
many factors, including the Companys cash flow and the liquidity and price
performance of its shares. As of November 10, 2008, no shares were repurchased
under this program.

15

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INTELLIGROUP, INC.

Item 2 Managements Discussion and
Analysis of Financial Condition and Results of Operations

The following discussion of our results of operations and financial
condition should be read in conjunction with the Financial Statements and Notes
included in Part I. Financial Information. This report contains forward
looking statements made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995 under Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended.

Forward-looking statements include statements with respect to our
beliefs, plans, objectives, goals, expectations, anticipations, assumptions,
estimates, intentions, and future performance, and involve known and unknown
risks, uncertainties and other factors, which may be beyond our control, and
which may cause our actual results, performance or achievements to be materially
different from future results, performance or achievements expressed or implied
by such forward-looking statements.

All statements other than statements of historical fact are statements
that could be forward-looking statements. You can identify these forward-looking
statements through our use of words such as may, will, can anticipate,
assume, should, indicate, would, believe, contemplate, expect,
seek, estimate, continue, plan, point to, project, predict,
could, intend, target, potential, and other similar words and
expressions of the future.

Forward-looking statements may not be realized due to a variety of
factors, including, without limitation:

- the inability to generate new sales and maintain
  profitability;
- the inability to attract and retain a sufficient
  number of highly skilled technical employees, particularly senior level
  technical personnel and project managers;
- Changes in the political, regulatory, and economic
  conditions in India, which is where a substantial portion of our operations
  are located;
- Effects of competition in the information
  technology services industry where there is a very high level of competition
  for employees and customers;
- Restrictions imposed by U.S. immigration
  regulation which could affect the ability of our employees who are primarily
  Indian nationals to obtain the necessary work visas to work in the United
  States;
- Inability to maintain access to external
  funding;
- Inability to maintain effective internal control
  over financial reporting or to remediate any weaknesses that may arise in the
  future;
- claims for damages by third parties, including
  liability claims arising from negligent acts, errors, mistakes or omission in
  rendering our IT professional services;
- our dependence on a limited number of large
  customers;
- A systems failure or disruption in
  telecommunications could disrupt our business and result in lost customers and
  negative publicity;
- Dependence on a limited number of software
  partners;
- disruption to our operations, including
  disruptions caused by geopolitical conditions in India;
- the effects of volatility and lack of liquidity in
  our common stock;
- our inability to protect our intellectual
  property;
- Third party claims that our services infringe on
  their intellectual property rights;
- We may be subject to increased tax liabilities,
  including if the spin-off in 2000 of our former subsidiary, SeraNova, is
  determined to be taxable. We could be liable in the range of $55 million to
  $65 million and related penalties (if assessed) and interest could increase
  the amount by $40 million to $50 million. In July 2000, we completed the
  tax-free spin-off of SeraNova, our former subsidiary. In March 2001, SeraNova
  and Silverline Technologies Limited (Silverline) consummated the acquisition
  of SeraNova by Silverline. Had the acquisition of SeraNova by Silverline been
  contemplated at the time of the spin-off, the spin-off would have been a
  taxable transaction. Based upon the information available to the us, we
  believe that such acquisition was not contemplated at the time of the spin-off
  of SeraNova by Intelligroup, and accordingly should not impact the tax-free
  nature of the spin-off. However, if it were determined that the spin-off was
  taxable, Intelligroup may have to bear the liability to pay such tax
  liability, which would be material. Please refer to Note 10 to the financial
  statements on in our annual report on Form 10-K for the year ended December
  31, 2007; and
- the factors listed under Item 1A. Risk Factors
  in our annual report on Form 10-K for the year ended December 31, 2007 and
  other reports that we file with the Securities and Exchange
  Commission.

16

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INTELLIGROUP, INC.

Item 2 Managements Discussion and
Analysis of Financial Condition and Results of Operations (Continued)

All forward-looking statements are
expressly qualified in their entirety by this cautionary notice. You are
cautioned not to place undue reliance on any forward-looking statements, which
speak only as of the date of this report. We have no obligation, and expressly
disclaim any obligation, to update, revise or correct any of the forward-looking
statements, whether as a result of new information, future events or otherwise.
We have expressed our expectations, beliefs and projections in good faith and we
believe they have a reasonable basis. However, we cannot assure you that our
expectations, beliefs or projections will result or be achieved or accomplished.

Overview

The Company plans, consults, builds
and manages ERP solutions based on SAP, Oracle, PeopleSoft and Microsoft
applications and technology platforms and also provide services around business
intelligence, ERP Infrastructure Management, E-Business ERP Integration, ERP
Testing, Application Management & Support and business process outsourcing
or BPO and knowledge process outsourcing or KPO.

The Company helps its customers
align and optimize their technology platforms, primarily their enterprise
resource planning or ERP systems, with their businesses. Such systems have
increasingly become mission critical for companies with revenues of between $500
million and $5 billion (Mid-Tier Market) or more, as these systems are used to
help them drive greater revenue and productivity as well as to better manage and
control costs.

The Company has worked to position
itself as the go-to partner for companies looking for an ERP and extended ERP
solutions partner particularly for Mid-Tier Market and that positioning provides
it with an important competitive edge. This positioning is reflected in the fact
that over 90% of our business is generated from ERP-driven projects.

In this
Section, the Company will discuss the following: (i) key factors in evaluating
the Companys financial performance; (ii) application of critical accounting
principles, which explains the accounting principles necessary to understand how
the Company records its financial information; (iii) results of operations -
consolidated, in which the Companys consolidated results are compared period to
period to recognize trends; (iv) results of operations by business segment,
which allows the Company to compare the results of its different business units;
(v) liquidity and capital resources; and (vi) recent accounting pronouncements,
which identifies new accounting literature that may have an impact on the
Companys future results.

Key Factors in Evaluating the
Companys Financial Performance

Management believes the following factors should be considered when
evaluating the Companys reported financial information contained in
Managements Discussion and Analysis of Financial Condition and Results of
Operations.

Revenue

The
majority of the Companys revenue is derived from professional services rendered
to customers. Revenue is typically recognized as services are performed. The
Companys services range from providing customers with a single consultant to
multi-personnel full-scale projects. Although the Company has contracts with
many of its customers to provide its services, in general, such contracts are
terminable upon relatively short notice, typically not more than 30 days. There
can be no assurance that the Companys customers will continue to enter into
contracts with the Company or that existing contracts will not be terminated.
The Company provides its services either directly to end-user organizations, or
as a member of a consulting team assembled by another IT consulting firm. Where
contractual provisions permit, customers also are billed for reimbursement of
expenses incurred by the Company on the customers behalf.

Fixed Price Projects

The
Company has provided services on certain projects in which it, at the request of
the clients, offers a fixed price for its services. For the nine months ended
September 30 2008 and 2007, revenue derived from projects under fixed price
contracts represented approximately 29% and 40%, respectively, of the Companys
total revenue. No single fixed price project was material to the Companys
business during the nine months ended September 30, 2008 or 2007. The Company
believes that, as it pursues its strategy of providing application management
services to customers, it will continue to offer fixed price projects. The
Company believes that there are certain risks related to fixed price
arrangements and thus prices such arrangements to reflect the associated risk.
There can be no assurance that the Company will be able to complete such
projects within the fixed price timeframes. The failure to perform within such
fixed price contracts, if entered into, could have a material adverse effect on
the Companys business, financial condition and results of operations.

Customer Concentration

The
Company has derived and believes that it will continue to derive a significant
portion of its revenue from a limited number of customers and projects. For the
nine months ended September 30, 2008 and 2007, the Companys ten largest
customers accounted for in the aggregate approximately 37% and 42% of its
revenue, respectively. During the three and nine months ended September 30,
2008, no single customer accounted for 10% or more of revenues. For the nine
months ended September 30, 2008 and 2007, 13% and 17%, respectively, of the
Companys revenue was generated by providing supplemental resources directly to
the end-customer or as part of a consulting team assembled by another IT
consulting firm. There can be no assurance that such IT consulting firms will
continue to engage the Company in the future at current levels of retention, if
at all.

Software Partners

For the
three and nine months ended September 30, 2008 and 2007, the Company derived the
following percentages of total revenue from projects in which the Company
implemented, extended, maintained, managed or supported software developed by
SAP, PeopleSoft and Oracle.

17

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INTELLIGROUP, INC.

Item 2 Managements Discussion and
Analysis of Financial Condition and Results of Operations (Continued)

|           | Percentage of
      Revenues
|---------- | ----------------------------
|           | Three Months ended          
|           | Sep 30, 2008                
|SAP        | 75                          
|PeopleSoft | 2                           
|Oracle     | 11                          
|e-Business | 5                           
|Others     | 7                           
|Total      | 100                         

Markets

The
Company currently serves the United States market with its headquarters in
Princeton (New Jersey), and branch offices in Atlanta, GA, Naperville IL and
Milpitas CA. The Company also maintains local offices to serve the markets in
India, the United Kingdom, Denmark and Japan.

Expenses

The
Companys most significant cost is project personnel expenses, which consist of
consultant salaries, payroll taxes, benefits and subcontractor fees. Thus, the
Companys financial performance is based primarily upon billing margin (billable
hourly rate less the cost to the Company of a consultant on an hourly basis) and
personnel utilization rates (billable hours divided by paid hours).

Application of Critical Accounting
Policies

The
preparation of the Companys condensed consolidated financial statements in
conformity with accounting principles generally accepted in the United States of
America requires us to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of contingent assets and
liabilities at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the reporting period. The
Companys estimates, judgments and assumptions are continually evaluated based
on available information and experience. Because of the use of estimates
inherent in the financial reporting process, actual results could differ from
those estimates.

Certain
of the Companys accounting policies require higher degrees of judgment than
others in their application. These include revenue recognition and allowance for
doubtful accounts, impairments and estimation of useful lives of long-term
assets, income tax recognition of current and deferred tax items, assumptions
used in valuing stock-based compensation arrangements, and accruals for
contingencies.

There
have been no material changes to our critical accounting policies and estimates
as identified in Item 7, Managements Discussion and Analysis of Financial
Condition and Results of Operations, included in our annual report on Form 10-K
for the fiscal year ended December 31, 2007.

Results of Operations  Consolidated
 nine months ended September 30, 2008 compared to nine months ended September
30, 2007.

The following table sets forth for
the periods indicated certain financial data expressed as a percentage of total
revenue:

Percentage of RevenueNine months ended September
      302008
    
    2007Revenue
    100.0
    %
    
    100.0
    %Cost of
      Revenues
    68.8
    
    
    73.8Gross Profit
    31.2
    
    
    26.2Selling general and administrative expenses
    22.9
    
    
    24.4Depreciation and
      amortization
    1.4
    
    
    1.7Total operating expenses
    24.3
    
    
    26.1Operating Income
    6.8
    
    
    0.1Interest Expense
    (0.1
    )
    
    (0.5
    )Other Income
      (Expense)
    (1.0
    )
    
    0.7Income before income tax provision
    5.7
    
    
    0.3Income tax
      provision
    0.9
    
    
    0.6Net income / (loss)
    4.8
    %
    
    (0.3
    )%


18

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INTELLIGROUP, INC.

Item 2 Managements Discussion and
Analysis of Financial Condition and Results of Operations (Continued)

Nine months Ended September 30, 2008
Compared to nine months Ended September 30, 2007

The following discussion compares
the consolidated results of operations for the nine months ended September 30,
2008 and 2007.

Revenue. Total revenue increased by
12.3% or $13.1million, from $106.7 million for the nine months ended September
30, 2007 to $119.8 million for the nine months ended September 30, 2008. The
increase was primarily due to continued new business wins primarily from
customers in the mid-tier market and continued or steady business with existing
customers. The revenue derived from consulting services related to SAP, Oracle
and other applications grew while the revenue generated from consulting services
related to PeopleSoft applications continued to decline. We expect that revenue
derived from services related to PeopleSoft applications will continue to
decline.

Cost
of revenue and gross profit. The Companys
cost of revenue increased by 4.7% or $3.7 million, from $78.8 million for the
nine months ended September 30, 2007 to $82.5 million for the nine months ended
September 30, 2008, primarily due to the increase in headcount and related
compensation and travel related costs for consultants. The Companys gross
profit increased by 33.7% or $9.4 million, from $27.9 million for the nine
months ended September 30, 2007 to $37.3 million for the nine months ended
September 30, 2008. Gross margin increased from 26.2% for the nine months ended
September 30, 2007 to 31.2% for the nine months ended September 30, 2008. The
increase in gross profit and gross margin was primarily due to the combination
of increased revenues combined with improved resource management and utilization
as well as efforts to contain non project costs.

Selling, general and administrative expenses. Selling, general and administrative expenses primarily consist of
salaries and related benefits for sales and general administrative personnel,
occupancy costs, related travel and entertainment and professional fees.
Selling, general and administrative expenses increased by 5.4%, or $1.4 million,
from $26.1 million for the nine months ended September 30, 2007 to $27.5 million
for the nine months ended September 30, 2008 resulting primarily from
investments the Company made to support growth in the business and decreased as
a percentage of revenue from 24.4% for the nine months ended September 30, 2007
to 22.9% for the nine months ended September 30, 2008 mainly on account of the
Companys focus on driving increased operational efficiencies through effective
cost management strategies.

Depreciation and amortization expensesThe Company recorded depreciation and amortization expenses of $1.7
million for the nine months ended September 30, 2008 as opposed to $1.8 million
for the nine months ended September 30, 2007.

Income
tax provision (benefit). The Company recorded
an income tax provision of $1.1 million on a pretax income of $6.8 million for
the nine months ended September 30, 2008 as opposed to an income tax provision
of $600,000 on a pretax income of $300,000 for the nine months ended September
30, 2007. The Companys effective tax rate reflects the impact of earnings in
various tax jurisdictions as well as historical losses incurred in certain of
those jurisdictions.

*Interest expense and other
income.*The Company recorded a net interest
expense of $.200,000 for the nine months ended September 30, 2008 as opposed to
$ 500,000 for the nine months ended September 30, 2007. The decrease is mainly
on account of reduction in prime rate and average outstanding loan balance with
the principal lender. The Company recorded other expenses of $1.2 million for
the nine months ended September 30, 2008 as opposed to other income of $ 800,000
during the nine months ended September 30, 2007. The increase in other expense
was mainly reflecting an impact from the Companys mark to market accounting for
its derivative instruments due to the unexpected decline of the value of the
Rupee versus the U.S. dollar in the second and third quarter of 2008. While
hedging is an important long-term risk management practice and an integral
component of onshore/offshore businesses, increasing fluctuations in foreign
exchange markets can still result in volatility in quarterly and year-to-date
operating results.

Results of Operations -
Consolidated Three months ended September 30, 2008 compared to three months
ended September 30, 2007.

The following table sets forth for
the periods indicated certain financial data expressed as a percentage of total
revenue:

Percentage of RevenueThree months ended September
      302008
    
    2007Revenue
    100.0
    %
    
    100.0
    %Cost of
      Revenues
    68.7
    
    
    70.9Gross Profit
    31.3
    
    
    29.1Selling general and administrative expenses
    21.4
    
    
    22.1Depreciation and
      amortization
    0.5
    
    
    1.5Total operating expenses
    21.9
    
    
    23.6Operating Income
    9.4
    
    
    5.5Interest Expense
    0.0
    
    
    (0.4
    )Other Income /
      (Expense)
    (1.7
    )
    
    2.1Income before income tax provision
    7.7
    
    
    7.2Income
      Tax
    1.2
    
    
    0.4Net income
    6.5
    %
    
    6.8
    %


19

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INTELLIGROUP, INC.

Item 2 Managements Discussion and
Analysis of Financial Condition and Results of Operations (Continued)

Three Months Ended September 30, 2008
Compared to Three Months Ended September 30, 2007

The following discussion compares
the consolidated results of operations for the Three months ended September 30,
2008 and 2007.

Revenue. Total revenue increased by
8.4% or $3.2 million, from $38.0 million for the three months ended September
30, 2007 to $41.2 million for the three months ended September 30, 2008. The
increase was primarily due to continued new business wins primarily from
customers in the mid-tier market and continued or steady business with existing
customers. The revenue derived from consulting services related to SAP, Oracle
and other applications grew while the revenue generated from consulting services
related to PeopleSoft applications continued to decline. We expect that revenue
derived from services related to PeopleSoft applications will continue to
decline.

Cost
of revenue and gross profit. The Companys
cost of revenue increased by 5.1% or $1.4 million, from $26.9 million for the
three months ended September 30, 2007 to $28.3 million for the three months
ended September 30, 2008, due primarily to the increase in headcount and related
compensation and travel related costs for consultants. The Companys gross
profit increased by 16.2% or $1.8 million, from $11.1 million for the three
months ended September 30, 2007 to $12.9 million for the three months ended
September 30, 2008. Gross margin increased from 29.1% for the three months ended
September 30, 2008 to 31.3% for the three months ended September 30, 2008. The
increase in gross profit and gross margin was primarily due to the combination
of increased revenues combined with improved resource management and utilization
as well as efforts to contain non project costs

Selling, general and administrative expenses. Selling, general and administrative expenses primarily consist of
salaries and related benefits for sales and general administrative personnel,
occupancy costs, related travel and entertainment and professional fees.
Selling, general and administrative expenses increased by 4.8%, or $400,000,
from $8.4 million for the three months ended September 30, 2007 to $8.8 million
for the three months ended September 30, 2008 resulting primarily from
investments the Company made to support growth in the business and decreased
marginally as a percentage of revenue from 22.1% for the three months ended
September 30, 2007 to 21.4% for the three months ended September 30,
2008.

Depreciation and amortization expensesThe Company recorded depreciation and amortization expenses of $0.2
million for the nine months ended September 30, 2008 as opposed to $0.6 million
for the nine months ended September 30, 2007. The decrease is primarily due to
the reversal in amortization expense as a result of the finalization of purchase
price allocation relating to the Novasoft acquisition

Income
tax provision (benefit). The Company recorded
an income tax provision of $500,000 on a pretax income of $3.2 million for the
three months ended September 30, 2008 as opposed to an income tax benefit of
$200,000 on a pretax income of $2.8 million for the three months ended September
30, 2007. The Companys effective tax rate reflects the impact of earnings in
various tax jurisdictions as well as historical losses incurred in certain of
those jurisdictions.

*Interest expense and other
income.*The Company recorded a net interest
income of $12,000 for the three months ended September 30, 2008 as opposed to
interest expense of $142,000 for the three months ended September 30, 2007. The
decrease was mainly on account of reduction in prime rate and average
outstanding loan balance with the principal lender. The Company recorded other
expenses of $700,000 for the three months ended September 30, 2008 as opposed to
other income of $800,000 during the three months ended September 30, 2007. The
increase in other expense is mainly reflecting an impact from the Companys mark
to market accounting for its derivative instruments due to the unexpected
decline of the value of the Rupee versus the U.S. dollar in the third quarter of
2008. While hedging is an important long-term risk management practice and an
integral component of onshore/offshore businesses, increasing fluctuations in
foreign exchange markets can still result in volatility in quarterly operating
results.

Results of Operations by Business
Segment

The Company operates in one industry
segment, information technology solutions and services.

The Company has four reportable
geographic operating segments, which are organized and managed on a geographical
basis, as follows:

- United States (US)  the largest segment of the
  Company, with operations in the US and Puerto Rico. Includes the operations of
  the Companys US subsidiary, Empower, Inc., and
  all corporate functions and activities. The US and corporate headquarters is
  located in Princeton, New
  Jersey;
- India  includes the operations of the Company in
  India, including services provided on behalf of other group subsidiaries,
  primarily to the US. The India offices are
  located in Hyderabad and Bangalore, India; A majority of the total revenue
  generated in India is derived from providing
  off shore development and support services to customers through the Companys
  affiliated entities in other parts of the world, but predominantly with the United States.
- Europe  includes the operations of the Company in
  Denmark and the United Kingdom. The European offices are located in Milton
  Keynes, United Kingdom; and Odense in
  Denmark
- Japan  includes the operations of the Company in
  Japan. The office is located in Tokyo, Japan.

20

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INTELLIGROUP, INC.

Item 2 Managements Discussion and
Analysis of Financial Condition and Results of Operations (Continued)

The
revenues are attributed to each segment on the basis of the location of the
entity which contracts with the customer and on the basis of the inter-company
agreements between India and other affiliated entities. The CEO has been
identified as the Chief Operating Decision Maker (CODM) because he has final
authority over resource allocation decisions and performance assessment. The
CODM regularly receives certain discrete financial information about the
geographical operating segments, including primarily revenue and operating
income, to evaluate segment performance.

Nine months ended September 30, 2008
Compared to nine months ended September 30, 2007

The following discussion compares
the segment results of operations for the nine months ended September 30, 2008
and 2007.

*Revenue*. The following table displays revenues by reportable segment
(in thousands).

**Nine months ended September
      30,**2008
    
    2007Dollars
    
    Percentage
      of
    
    Dollars
    
    **Percentage of**Total
    
    
    
    **Total**United States
    $
    69,768
    
    58.2
    %
    
    $
    66,036
    
    61.9
    %India
    
    34,936
    
    29.2
    
    
    
    29,333
    
    27.5Europe
    
    11,424
    
    9.5
    
    
    
    8,672
    
    8.1Japan
    
    3,668
    
    3.1
    
    
    
    2,704
    
    2.5Total
    $
    119,797
    
    100
    %
    
    $
    106,745
    
    100
    %


US revenue increased by 5.8% or $3.8
million, from $66 million for the nine months ended September 30, 2007 to $69.8
million for the nine months endedSeptember 30,
2008. The increase was primarily on account ofcontinued new business wins primarily with customers in the mid-tier
market, and from steady or increased sales to existing customers.

India
revenue increased by 19.5%, or $5.7 million, from $29.3 million for the nine
months ended September 30, 2007 to $35.0 million for the nine months ended
September 30, 2008. The increase was attributable to increased demand for
offshore services from customers in the United States, as a majority of the
total revenue generated in India is derived from providing offshore development
and support services to customers sourced through the Companys affiliated
entities in other parts of the world, but predominantly with the United
States.

Europe
revenue increased by 31.3% or $2.7 million, from $8.7 million for the nine
months ended September 30, 2007 to $11.4 million for the nine months ended
September 30, 2008. The increase in Europe revenue resulted primarily from
increased demand for the Companys consulting services in the local ERP market
and the expanded customer base due to the Novasoft acquisition towards the end
of 2007.

Japan
revenue increased by 37% or $1.0 million, from $2.7 million for the nine months
ended September 30, 2007 to $3.7 million for the nine months ended September 30,
2008. The increase was due primarily to increased demand for the Companys
consulting services within the local ERP market.

*Operating Income
(Loss)*. The following table displays
operating income (loss) by reportable segment (in thousands).

Nine months
      ended September 30,2008
    
    2007United States
    $
    2,822
    
    
    ($
    3,469
    )India
    
    4,579
    
    
    
    2,592Europe
    
    693
    
    
    
    708Japan
    
    98
    
    
    
    211Total
    $
    8,193
    
    
    
    $42


US
operating performance improved by $6.3 million from an operating loss of $3.5
million for the nine months ended September 30, 2007 to an operating profit of
$2.8 million for the nine months ended September 30, 2008. The improvement in
operating performance was primarily related to an improvement in resource
utilization and a decrease in general and administration expenses combined with
increased revenues.

India
operating income increased by $2.1 million from an operating profit of $2.5
million for the nine months ended September 30, 2007 to an operating profit of
$4.6 million for the nine months ended September 30, 2008. The increase in
operating profit was primarily related to an increase in revenues.

Europe
operating performance decreased marginally by $15,000 from an operating profit
of $708,000 for nine months ended September 30, 2007 to an operating profit of
$693,000 for the nine months ended September 30, 2008.

Japan
operating performance decreased by $100,000 from an operating profit of $200,000
for nine months ended September 30, 2007 to an operating profit of $100,000 for
the nine months ended September 30, 2008 as its operating expenses increased
proportionately to its increase in revenues.

21

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INTELLIGROUP, INC.

Item 2 Managements Discussion and
Analysis of Financial Condition and Results of Operations (Continued)

Three Months Ended September 30, 2008
Compared to Three Months Ended September 30, 2007

The following discussion compares
the segment results of operations for the three months ended September 30, 2008
and 2007.

*Revenue*. The following table displays revenues by reportable segment
(in thousands).

**Three months ended Sep
      30,**2008
    
    2007Dollars
    
    Percentage
      of
    
    Dollars
    
    **Percentage of**Total
    
    
    
    **Total**United States
    $
    24,338
    
    59.1
    %
    
    $
    23,589
    
    62.1
    %India
    
    12,151
    
    29.5
    
    
    
    10,126
    
    26.6Europe
    
    3,347
    
    8.1
    
    
    
    3,091
    
    8.1Japan
    
    1,370
    
    3.3
    
    
    
    1,204
    
    3.2Total
    $
    41,207
    
    100
    %
    
    $
    38,010
    
    100
    %


US revenue increased by 3% or $0.7
million, from $23.6 million for the three months ended September 30, 2007 to
$24.3 million for the three months ended September 30, 2008. The increase was
primarily on account of continued new business
wins primarily with customers in the mid-tier market, and from steady or
increased sales to existing customers.

India
revenue increased by 20%, or $2 million, from $10.1 million for the three months
ended September 30, 2007 to $12.1 million for the three months ended September
30, 2008. The increase was attributable to increased demand for offshore
services from customers in the United States, as a majority of the total revenue
generated in India was derived from providing offshore development and support
services to customers sourced through the Companys affiliated entities in other
parts of the world, but predominantly with the United States.

Europe
revenue increased by 6.5% or $0.2 million, from $3.1 million for the three
months ended September 30, 2007 to $3.3 million for the three months ended
September 30, 2008. The increase in Europe revenue resulted primarily from
increased demand for the Companys consulting services in the local ERP market
and the expanded customer base due to the Novasoft acquisition towards the end
of 2007.

Japan
revenue increased by 16.7% or $0.2 million, from $1.2 million for the three
months ended September 30, 2007 to $1.4 million for the three months ended
September 30, 2008. The increase was due primarily to increased demand for the
Companys consulting services within the local ERP market.

*Operating
Income*. The following table displays
operating income by reportable segment (in thousands).

Three months
      ended September 30,2008
    
    2007United States
    
    $1,592
    
    
    
    $602India
    
    1,924
    
    
    
    596Europe
    
    140
    
    
    
    573Japan
    
    206
    
    
    
    337Total
    
    $3,861
    
    
    $
    2,108


US
operating performance improved by $1.0 million from an operating profit of
$600,000 for the three months ended September 30, 2007 to an operating profit of
$1.6 million for the three months ended September 30, 2008. The improvement in
operating performance was primarily related to an improvement in resource
utilization and a decrease in general and administration expenses combined with
increased revenues.

India
operating income increased by $1.3 million from an operating profit of $600,000
for the three months ended September 30, 2007 to an operating profit of $1.9
million for the three months ended September 30, 2008. The increase in operating
profit is primarily related to an increase in revenues.

Europe
operating performance decreased by $500,000 from an Operating profit of $600,000
for the three months ended September 30, 2007 to an operating profit of $100,000
for the three months ended September 30, 2008. The decrease was primarily due to
increase in the operating costs in the region.

Japan
operating performance decreased by $100,000 from an Operating profit of $300,000
for the three months ended September 30, 2007 to an operating profit of $200,000
for the three months ended September 30, 2008. The decrease was primarily due to
increase in the operating costs in the region.

22

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INTELLIGROUP, INC.

Item 2 Managements Discussion and
Analysis of Financial Condition and Results of Operations (Continued)

Liquidity and Capital Resources

Cash Position and Cash Flows

The
Company had cash and cash equivalents of $8.7 million at September 30, 2008 and
$8.4 million at December 31, 2007. The Company had working capital of $23.1
million at September 30, 2008 and $17.6 million at December 31, 2007. The
increase in working capital resulted primarily from increase in accounts
receivable balances.

Cash
generated from operating activities was $5.3 million for the nine months ended
September 30, 2008, resulting primarily from the net profit of $5.7 million.
Cash used in operating activities was $1.0 million for the nine month ended
September 30, 2007, resulting primarily from an increase in unbilled accounts
receivable balances.

The
Company invested $700,000 and $2.3 million in computer equipment, internal-use
computer software and office furniture, fixtures and leasehold improvements
during the nine months ended September 30, 2008 and 2007, respectively. Net cash
provided by investments was $900,000 during the nine month ended September 30,
2007 while there was no net purchase or sale of investment instruments during
the nine month ended September 30, 2008.

Cash used
in financing activities was $4 million and $1.3 million during the nine month
ended September 30, 2008 and September 30, 2007, respectively, resulting
primarily from repayment of line of credit borrowings.

Credit Facility

On May
22, 2008, the Company and its wholly-owned subsidiary Empower, Inc. closed out
the existing $15 million line of credit with Steel City Capital Funding. The
Company entered into a revolving credit loan and security agreement (Credit
Agreement) with HSBC Bank, (the Bank). The Credit Agreement is comprised of a
three year revolving line of credit pursuant to which the Company can borrow up
to $10.0 million at the Banks Base Rate (as defined in the Credit Agreement) of
5.0% as of September 30, 2008, minus 0.85% percent. The credit facility is
collateralized by substantially all of the assets of the United States based
operations and all subsidiary stock (not to exceed 65% of the Equity Interests
of any Foreign Subsidiary). The maximum borrowing availability under the Credit
Agreement is based upon a percentage of eligible billed and unbilled accounts
receivable. The Credit Agreement provides for certain financial covenants that
shall only be tested as of the end of any fiscal quarter.

The Company was in compliance with
the applicable financial covenants of the loan agreement related to the Credit
Agreement as of September 30, 2008.

As of
September 30, 2008, the Company had approximately $100,000 outstanding
borrowings under the Credit Agreement. The Company estimates undrawn
availability under the Credit Facility to be $9.9 million as of September 30,
2008.

In order
to finance a significant portion of the purchase price for the Novasoft
Acquisition, IGE received a loan (UK Loan) of £ 1,500,000 from Lloyds Bank PLC
Lloyds Bank TBS during the twelve month period ended December 31, 2007. This
loan is secured by a stand by letter of credit from Citibank N.A. (Citibank),
for which Intelligroup Asia Private Limited (IGA) has placed a hundred and ten
percent margin money deposits with Citibank. The loan is payable in three annual
installments of₤500,000 starting October 2008, with interest payable monthly at the rate
of 6.75% APR The Company repaid this loan in entirety during the fourth quarter
of 2008.

*Cash to Fund Operating
Activities*

The
Company relies on the cash generated by operating activities, cash on hand and
the financing available under its credit facility to fund ongoing operations.
The Companys credit facility with the Bank represents its sole source of
external financing for ongoing business operations. The Companys operating plan
depends on its cash generated by operating activities continued borrowing
availability under this credit facility or securing alternate sources of
financing. The Company must comply with certain covenants or secure from the
Bank waivers of any default on such covenants to maintain its line of credit
with the Bank. Given the Companys variable operating performance in the past
few years, there can be no assurances that the Company will be able to maintain
compliance with the applicable financial covenants under its credit agreement or
obtain waivers of any defaults.

The
Companys 2008 operating plan contains assumptions regarding revenue and
expenses. The achievement of the operating plan depends heavily on the timing of
work performed by the Company on existing projects and the ability of the
Company to gain and perform work on new projects. Project cancellations, delays
in the timing of work performed by the Company on existing projects or the
inability of the Company to gain and perform work on new projects, or ability to
timely collect cash from its customers could have an adverse impact on the
Companys ability to execute its operating plan and maintain adequate cash flow.
In the event actual results do not meet the operating plan, management believes
it could execute contingency plans to mitigate such effects. Such plans include
reductions in capital expenditures and operating costs, and/or seeking
additional financing. In addition, the Company may seek additional financing
from time to time to fund its cash requirements for operating expenses and
capital expenses; however, the availability of financing may be limited because,
among other things, the Company is not currently listed on a national stock
exchange. Assuming that the Company achieves the revenue and expense targets
included in the Companys operating plan, management believes that the Companys
cash on hand and cash generated by operations and borrowings under its credit
facility will be sufficient to fund the Companys current and planned operations
through at least the next twelve months.

*Share Repurchase Program*

On
October 24th2008, the Board of Directors of the Company approved a share repurchase
program of up to $5,000,000 of the Company's common stock over the next 18
months. The share repurchase program will be funded using the Company's working
capital and authorizes the Company to repurchase shares from time to time
through open market or privately negotiated transactions. The Company also
intends to adopt a Rule 10b5-1 trading plan that will allow the Company to
purchase its shares at times when it ordinarily would not be in the market due
to its internal trading policy. The program will expire on the earlier of (i)
the repurchase of the maximum number of shares under the program, (ii) the 18
month anniversary of the approval of the program or (iii) a determination by the
Board of Directors to discontinue the program. The Company is not obligated to
repurchase shares under the authorization or enter into a Rule 10b5-1 trading
plan and the timing, actual number and value of shares purchased will depend on
many factors, including the Companys cash flow and the liquidity and price
performance of its shares.

23

---

INTELLIGROUP, INC.

Item 3. Quantitative and Qualitative
Disclosures about Market Risk.

Although
the Company cannot accurately determine the precise effect thereof on its
operations, it does not believe inflation or interest rate changes have
historically had a material effect on its revenues or results of operations.
However, significant effects of inflation, currency fluctuations and changes in
interest rates on the economies of the United States, Asia and Europe could
favorably or adversely impact the Companys revenues and results of operations
in the future. Currency fluctuations have historically had and will continue to
have an impact on the Companys operations. If there is a material change in the
relationship between European currencies and/or Asian currencies and the United
States Dollar, such change could materially affect the result of the Companys
European and/or Asian operations as reflected in the Companys consolidated
financial statements.

The
Company is exposed to foreign currency exchange rate risk in the ordinary course
of doing business as it transacts or holds a portion of funds in foreign
currencies, particularly the Indian Rupee. Accordingly, management periodically
evaluates the need for hedging strategies to mitigate the effect of foreign
currency fluctuations. As of September 30, 2008, $25 million of the foreign
currency European Option contracts and $12.55 million foreign currency forward
contracts remain outstanding which are expected to be settled by May 2010. The
details of such derivative contracts are given below.

|                     |  | Option
      Contracts          |  | Forward
      Contracts     
|-------------------- |  | ------------------------------- |  | ----------------------------
|Notional Amount      |  | $25
      million               |  | $12.55 million              
|Rates                |  | INR 39.70 to
      43.45        |  | INR 43.21 to
      44.93    
|Effective date       |  | 05/18/07, 11/28/07 and 01/17/08 |  | 6/5/2008,6/6/08,6/30/2008,  
|                     |  |                                 |  | 8/14/2008 and 8/20/2008     
|Maturity
      Dates |  | 10/28/2008 to
      05/26/10    |  | 12/30/2008 to
      12/30/09
|Fair
      Value     |  | $
      (2.4) million           |  | $
      (0.8) million       

Management may continue to enter
into such contracts in the future to reduce foreign currency exposure to
appreciation or depreciation in the value of certain foreign currencies. Other
than the aforementioned derivative contracts, the Company has not engaged in
hedging activities nor entered into off-balance sheet transactions, arrangements
or other relationships with unconsolidated entities or other persons that are
likely to affect liquidity or the availability of or requirements for capital
resources.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

The
Company is responsible for maintaining disclosure controls and procedures
designed to ensure that information required to be disclosed in its Exchange Act
reports is recorded, processed, summarized and reported within the time periods
specified in the Securities Exchange Commissions rules and regulations, and
that such information is accumulated and communicated to its management,
including its chief executive officer and chief financial officer, as
appropriate, to allow for timely decisions regarding required disclosure. The
Companys management, with the participation of the Companys Chief Executive
Officer and Chief Financial Officer, evaluated the effectiveness of the
Companys disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) under the Exchange Act) as of the end of the period covered by this
report. In designing and evaluating the Companys disclosure controls and
procedures, management recognized that any controls and procedures, no matter
how well designed and operated, can provide only reasonable assurance of
achieving their objectives and management necessarily is required to apply its
judgment in evaluating the cost-benefit relationship of possible controls and
procedures and implementing controls and procedures based upon the application
of managements judgment. Based on its evaluation, the Companys principal
executive officer and principal financial officer have concluded that, as of
September 30, 2008, its disclosure controls and procedures were effective as
defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act.

Changes in Internal Controls

There
were no changes in our internal control over financial reporting during the
quarter ended September 30, 2008, that materially effected, or are reasonably
likely to materially affect, our internal control over financial
reporting.

24

---

INTELLIGROUP, INC.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

There is no
pending litigation to which the Company is a party or to which any of its
property is subject that would have a material impact on its consolidated
financial condition, results of operations or cash flows in the event we were
unsuccessful in such litigation. However, the Company cannot predict with
certainty the outcome of any litigation or the potential for future litigation
and any such matters could adversely affect its financial condition, results of
operations, cash flows and business.

Item 1a. Risk Factors

There have been no material changes
to our risk factors previously disclosed in our annual report on Form 10-K for
the period ended December 31, 2007.

Item 2. Unregistered Sales of Equity
Securities and Use of Proceeds

There are no matters to report
subject to this Item for the period ended September 30, 2008.

Item 3. Defaults Upon Senior Securities

There are no matters to report
subject to this Item for the period ended September 30, 2008.

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

The Company
held its annual meeting on September 18, 2008 (2008 Annual Meeting) at which
the matters described herein were submitted to a vote of the security holders.

At the 2008
Annual Meeting, the Company submitted a proposal to elect Vikram Gulati, Ravi
Adusumalli, Ajit Isaac, Babar Khan, Srini Raju and Sandeep Reddy to serve as
directors until the next annual meeting of shareholders and until their
respective successors have been duly elected and qualified. The votes cast for
or withheld for each nominee were as follows:

|Nominee:         |  | Votes For:        |  | Votes Withheld: 
|---------------- |  | ----------------- |  | ----------------
|Vikram Gulati    |  | 35,528,608 Shares |  | 564,497 Shares  
|Ravi Adusumalli  |  | 35,528,708
Shares |  | 571,548
Shares  
|Ajit
      Isaac |  | 35,528,593 Shares |  | 564,597 Shares  
|Babar Khan       |  | 35,529,188
Shares |  | 564,612
Shares  
|Srini
      Raju |  | 35,523,657 Shares |  | 564,017 Shares  
|Sandeep Reddy    |  | 35,521,657
Shares |  | 569,548
  Shares

At the 2008
Annual Meeting, the Company submitted a proposal to ratify the appointment of
Ernst & Young LLP as the Companys independent auditors for the year ended
December 31, 2008. The votes cast for, against or abstaining from, and the
broker non-votes were as follows:

|No.
      of |  | **No. of Shares**        |  | **No. of**       |  | **No. of Broker**
|------------ |  | ------------------------ |  | ---------------- |  | -----------------
|Voted For:   |  | **Voted
      Against:** |  | **Abstentions:** |  | **Non-vote:**    
|36,070,207   |  | 16,996                   |  | 6,001            |  | 0                

Item 5. Other Information

There are no matters to report
subject to this Item for the period ended September 30, 2008.

Item 6. Exhibits

See exhibit index hereto, which is
incorporated by reference herein.

25

---

INTELLIGROUP, INC.

EXHIBIT INDEX

|Exhibit No. |   | Description of Exhibit |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|----------- | - | ---------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|           
|2           |   |                        | Agreement and Plan of Merger of
      the Company and its wholly owned subsidiary Oxford Systems Inc. dated
      December 2, 1996 (Incorporated by reference to the Company's Annual Report
      on Form 10-KSB for the year ended December 31, 1996.)                                                                                                                                                                                                                                                                                
|           
|3.1         |   |                        | Amended and Restated Certificate
      of Incorporation dated December 27, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|           
|3.2         |   |                        | Amended and Restated Bylaws.
      (Incorporated by reference to the Company's Registration Statement on Form
      SB-2 (Registration Statement No. 333-5981) declared effective on September
      26, 1996.)                                                                                                                                                                                                                                                                                                                         
|           
|4.1         |   |                        | Shareholder Protection Rights
      Agreement dated as of November 6, 1998, between the Company and American
      Stock Transfer & Trust Company which includes (I) the Form of Rights
      Certificate and (ii) the Certificate of Amendment to the Amended and
      Restated Certificate of Incorporation of Intelligroup, Inc. (Incorporated
      by reference to Exhibit No. 4.1 of the Company's Report on Form 8-K dated
      November 9, 1998, filed with the Securities and Exchange Commission on
      November 9, 1998.)
|           
|4.2         |   |                        | Amendment dated September 29,
      2004 to the Shareholder Protection Rights Agreement dated November 6,
      2004. (Incorporated by reference to Exhibit No. 4.1 of the Companys
      Report on Form 8-K dated September 29, 2004, filed with the Securities and
      Exchange Commission on October 5, 2004.)                                                                                                                                                                                                                    
|           
|10.1        | * |                        | 1996 Stock Plan, as amended, of
      the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|           
|10.2        | * |                        | 1996 Non-Employee Director Stock
      Option Plan. (Incorporated by reference to the Company's Registration
      Statement on Form SB-2 (Registration Statement No. 333-5981) declared
      effective on September 26, 1996.)                                                                                                                                                                                                                                                                                                        
|           
|10.3        | * |                        | Form of Indemnification Agreement
      entered into by the Company and each of its Directors and officers.
      (Incorporated by reference to the Company's Registration Statement on Form
      SB-2 (Registration Statement No. 333-5981) declared effective on September
      26, 1996.)                                                                                                                                                                                                                                          
|           
|10.4        | * |                        | Employee's Invention Assignment
      and Confidentiality Agreement. (Incorporated by reference to the Company's
      Registration Statement on Form SB-2 (Registration Statement No. 333-5981)
      declared effective on September 26, 1996.)                                                                                                                                                                                                                                                                                       
|           
|10.5        |   |                        | Services Provider Agreement by
      and between Oracle Corporation and the Company dated July 26, 1994.
      (Incorporated by reference to the Company's Registration Statement on Form
      SB-2 (Registration Statement No. 333-5981) declared effective on September
      26, 1996.) See Exhibit 10.8.                                                                                                                                                                                                                           
|           
|10.6        |   |                        | Agreement by and between the
      Company and Intelligroup Asia Private Limited ("Intelligroup Asia")
      relating to operational control of Intelligroup Asia, with related
      agreements. (Incorporated by reference to the Company's Registration
      Statement on Form SB-2 (Registration Statement No. 333-5981) declared
      effective on September 26, 1996.)                                                                                                                                                          
|           
|10.7        |   |                        | Amendment No. 1 to Services
      Provider Agreement by and between Oracle Corporation and the Company dated
      December 30, 1996. (Incorporated by reference to the Company's Annual
      Report on Form 10-KSB for the year ended December 31, 1996.) See Exhibit
      10.6.                                                                                                                                                                                                                                                     
|           
|10.8        |   |                        | R/3 National Logo Partner
      Agreement by and between SAP America, Inc. and the Company dated as of
      April 29, 1997. (Incorporated by reference to the Company's Registration
      Statement on Form SB-2 (Registration Statement No. 333-29119) declared
      effective on June 26, 1997.) See Exhibits 10.10, 10.14 and
      10.24.                                                                                                                                                                                        
|           
|10.9        |   |                        | ASAP Partner Addendum to R/3
      National Logo Partner Agreement between SAP America, Inc. and the Company
      effective July 1, 1997 (amends existing R/3 National Logo Partner
      Agreement). (Incorporated by reference to the Company's Quarterly Report
      on Form 10-QSB for the quarter ended September 30, 1997.) See Exhibits
      10.9, 10.14 and 10.24.                                                                                                                                                           
|           
|10.1        | 0 |                        | Implementation Partner Agreement
      between PeopleSoft, Inc. and the Company effective July 15, 1997.
      (Incorporated by reference to the Company's Quarterly Report on Form
      10-QSB for the quarter ended September 30, 1997.) See Exhibit
      10.13.                                                                                                                                                                                                                                                                    
|           
|10.1        | 1 |                        | Lease Agreement between
      Alfieri-Parkway Associates, as Landlord, and Intelligroup, Inc., as
      Tenant, dated March 17, 1998. (Incorporated by reference to the Company's
      Quarterly Report on Form 10-Q for the quarter ended March 31,
      1998.)                                                                                                                                                                                                                                                                      
|           
|10.1        | 2 |                        | Fifth Amendment to the
      Implementation Partner Agreement dated July 15, 1998, between the Company
      and PeopleSoft, Inc. See Exhibit 10.11.                                                                                                                                                                                                                                                                                                                                                                                    
|           
|10.1        | 3 |                        | Amendment to the National
      Implementation Partner Agreement dated as of January 1, 1999, between SAP
      America and the Company. See Exhibits 10.9, 10.10 and
  10.24.                                                                                                                                                                                                                                                                                                                                                          

26

---

|Exhibit No. |  | Description of Exhibit                                                                                                                                                                                                                                                                                                                          | 
|----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|           
|10.14       |  | mySap.com Partner-Services Addendum
      effective June 7, 2000 to R/3 National Logo Partner Agreement between SAP
      America, Inc. and the Company. (Incorporated by reference to the Companys
      Annual Report on Form 10-K for the year ended December 31, 2000.) See
      Exhibits 10.9, 10.10 and 10.14.                         
|           
|10.15       |  | Service Alliance Master Agreement and Addendums dated May 5,
      2000 between PeopleSoft, Inc. and the Company. (Incorporated by reference
      to the Companys Annual Report on Form 10-K for the year ended December
      31, 2000.)                                                                                                    
|           
|10.16       |  | 2004 Equity Incentive Award
      Plan.                                                                                                                                                                                                                                                                                                        
|           
|10.17       |  | First Amendment to the 2004 Equity
      Incentive Award Plan. (Incorporated by reference to the Companys Current
      Report on Form 8-K dated September 29, 2004, filed with the Securities and
      Exchange Commission on October 5, 2004.)                                                                                             
|           
|10.18       |  | Common Stock Purchase Agreement
      dated September 29, 2004 by and between the Company, SB Asia
      Infrastructure Fund LP and Venture Tech Assets Ltd. (Incorporated by
      reference to the Companys Current Report on Form 8-K datedSeptember 29, 2004, filed with the Securities and
      Exchange Commission on October 5, 2004.)
|           
|10.19       |  | Amendment No. 1 to the Common Stock Purchase Agreement dated
      September 29, 2004. (Incorporated by reference to the Companys Current
      Report on Form 8-K dated March 25, 2005, filed with the Securities and
      Exchange Commission on March 25, 2005.)                                                                          
|           
|10.20       |  | Employment Agreement effective June 30, 2005
      between the Company and Vikram Gulati. (Incorporated by reference to the
      Companys Current Report on Form 8-K dated June 30, 2005, filed with the
      Securities and Exchange Commission on July 7, 2005.)                                                                          
|           
|10.21       |  | Second Amendment to the 2004 Equity
      Incentive Award Plan.                                                                                                                                                                                                                                                                                
|           
|10.22       |  | Common Stock Purchase Agreement dated March
      30, 2006 by and between Intelligroup Inc., SB Asia Infrastructure Fund LP
      and Venture Tech Assets, Ltd. (Incorporated by reference to the Companys
      current report on Form 8-K dated March 30, 2006 filed with the Securities
      and Exchange Commission on April 5, 2006.)   
|           
|10.23       |  | First Amendment to the Employment Agreement
      dated June 30, 2005 between Intelligroup Inc. and Vikram Gulati.
      (Incorporated by reference to the Companys current report on Form 8-K
      dated April 6, 2006, filed with the Securities and Exchange Commission on
      April 13, 2006.)                                         
|           
|10.24       |  | Second Amendment to Employment Agreement
      dated June 30, 2005, between Intelligroup, Inc. and Vikram Gulati.
      (Incorporated by reference to the Companys current report on Form 8-K
      dated June 8, 2006 filed with the Securities and Exchange Commission on
      June 12, 2006.)                                             
|           
|10.25       |  | Third Amendment to the 2004 Equity Incentive
      Award Plan.                                                                                                                                                                                                                                                                                 
|           
|10.26       |  | Employment Agreement dated September 7, 2006
      by and between Intelligroup, Inc. and Alok Bajpai. (Incorporated by
      reference to the Companys Current Report on Form 8-K dated September 7,
      2006, filed with the Securities and Exchange Commission on September 7,
      2006.)                                               
|           
|10.27       |  | Amendment No.3 dated June 8, 2007 to
      Employment agreement dated June 30, 2005 between Intelligroup, Inc. and
      Vikram Gulati. (Incorporated by reference to the Companys Current Report
      on Form 8-K dated June 8, 2007, filed with the Securities
      and Exchange Commission on June 13, 2007.)                            
|           
|10.28       |  | Master Assignment Agreement between Novasoft
      Information Technology (Europe) Limited and Intelligroup Europe Limited
      dated June 8, 2007 (Incorporated by reference to the Companys Current
      Report on Form 8-K dated June 8, 2007, filed with the Securities and
      Exchange Commission on June 14, 2007.)                
|           
|10.29       |  | Master Assignment Agreement between ISG
      Novasoft Technologies Limited and Intelligroup Asia Private Limited dated
      June 8, 2007 (Incorporated by reference to the Companys Current Report on
      Form 8-K dated June 8, 2007, filed with the Securities and Exchange
      Commission on June 14, 2007.)                         
|           
|10.30       |  | Non Compete Agreement between
      Novasoft Information Technology Corporation and Intelligroup Europe Ltd.
      Dated June8, 2007. (Incorporated by
      reference to the Companys Current Report on Form 8-K dated June 8, 2007,
      filed with the Securities and Exchange Commission on June 14,
      2007.)                        
|           
|10.31       |  | Employment Agreement between Intelligroup
      Asia Pvt. Ltd. and Kalyan Sundaram Mahalingam. (Incorporated by reference
      to the Companys annual report on Form 10-K for the year ended December
      31, 2007 filed with the Securities and Exchange Commission on March 31,
      2008).                                             

27

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|Exhibit No. |  | Description of Exhibit                                                                                                                                                                                                                                                                                                                                                               | 
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | 
|           
|10.32       |  | Amendment No.1 dated August 22, 2007 to
      Master Assignment Agreement between Novasoft Information Technology
      (Europe) Limited and Intelligroup Europe Limited dated June 8, 2007 .
      (Incorporated by reference to the Companys Current Report on Form 8-K
      dated August 22, 2007, filed with the Securities and Exchange Commission
      on August 28, 2007.)
|           
|10.33       |  | Amendment No.1 dated August 22, 2007 to
      Master Assignment Agreement between ISG Novasoft Technologies Limited and
      Intelligroup Asia Private Limited dated June 8, 2007 (Incorporated by
      reference to the Companys Current Report on Form 8-K dated August 22,
      2007, filed with the Securities and Exchange Commission on August 28,
      2007.)           
|           
|10.34       |  | Amendment No.1 dated August 22, 2007 to Non
      Compete Agreement between Novasoft Information Technology Corporation and
      Intelligroup Europe Ltd. Dated June 8, 2007.                                                                                                                                                                                                      
|           
|10.35       |  | Amendment No.1 dated February 4, 2008 to
      Employment Agreement dated September 7, 2006 between Intelligroup, Inc.
      and Alok Bajpai. (Incorporated by reference to the Companys Current
      Report on Form 8-K dated February 4, 2008, filed with the Securities and
      Exchange Commission on February 4, 2008.)                                                    
|           
|10.36       |  | Revolving Credit and
      Security Agreement dated May 22, 2008 by and between Intelligroup Inc.,
      Empower Inc. and HSBC Bank USA, National Association (incorporated by
      reference to Companys current report on Form 8-K dated May 22, 2008,
      filed with the Securities and Exchange Commission on May 28,
      2008.)                                          
|           
|10.37       |  | Revolving Promissory Note dated May 22, 2008
      (incorporated by reference to Companys current report on Form 8-K dated
      May 22, 2008 filed with the Securities and Exchange Commission on May 28,
      2008.)                                                                                                                                                            
|           
|10.38       |  | Amendment No.2 dated September 11 2008 to
      Employment Agreement dated September 7, 2006 between Intelligroup, Inc.
      and Alok Bajpai. (Incorporated by reference to the Companys Current
      Report on Form 8-K dated September 11, 2008, filed with the Securities and
      Exchange Commission on September 11, 2008.)                                               
|           
|31.1       |  | Certifications of Chief Executive
      Officer Pursuant to Rule 13a-14(a), as Adopted Pursuant to Section 302 of
      the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                              
|           
|31.2       |  | Certifications of Chief Financial Officer
      Pursuant to Rule 13a-14(a), as Adopted Pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                              
|            |  |                                                                                                                                                                                                                                                                                                                                                                                     
|32.1       |  | Certifications of
      Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
      Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                      
|            |  |                                                                                                                                                                                                                                                                                                                                                                                     
|32.2       |  | Certifications of Chief Financial
Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002                                                                                                                                                                                                                                  

|* |  | A management contract or compensatory plan or
      arrangement required to be filed as an exhibit pursuant to Item 15(c) of
      Form 10-K.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------
|  |  |                                                                                                                                              
| |  | Filed herewith. All other exhibits
previously filed.                                                                                         

28

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SIGNATURES

Pursuant
to the requirements of Section 13 or 15(d) 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 this 12th day of November 2008.

|                              | INTELLIGROUP, INC.
|----------------------------- | ------------------
|                              |                   
|Date: November
      12, 2008 | By:               
|                              |                   
|                              |                   
|                              |                   
|                              |                   
|Date: November
      12, 2008 | By:               
|                              |                   
|                              |                   
|                              |                   

29

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