UNITED STATESSECURITIES AND EXCHANGE COMMISSION Washington, DC 20549

FORM 10-Q

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

For the quarterly period ended March
31, 2009

Commission file number 0-20943
INTELLIGROUP, INC.

|                                                            
|------------------------------------------------------------
|(Exact
      Name of Registrant as Specified In Its Charter)

|New Jersey                                                 |  | 11-2880025                                
|---------------------------------------------------------- |  | ------------------------------------------
|(State or
      Other Jurisdiction of Incorporation or     |  | (I.R.S.
      Employer Identification No.)
|Organization)                                              |  |                                           
|                                                           |  |                                           
|5 Independence Way, Suite 220,
      Princeton, New Jersey |  | 08540                                     
|(Address of
      Principal Executive Offices)             |  | (Zip
      Code)                          

|**(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 has
submitted electronically and posted on its corporate website, if any, every
interactive data file required to be submitted and posted pursuant to Rule 405
of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or
for such shorter period that the registrant was required to submit and post such
files).YesoNo 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 April 27,
2009:

|Class                              | Number of
      Shares
|---------------------------------- | ----------------------
|Common Stock,
      $.01 par value | 41,529,307            
|                                  

1

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TABLE OF CONTENTS

|                              |    |                                                                                                            | Page
|----------------------------- | -- | ---------------------------------------------------------------------------------------------------------- | ----
|PART I. FINANCIAL INFORMATION |   
|                              |    |                                                                                                            |     
|Item 1.                       |    | Financial Statements                                                                                       |     
|                              |    |                                                                                                            |     
|                              |    | Condensed Consolidated Balance Sheets as of March 31,
      2009 (unaudited) and December 31, 2008         | 4   
|                              |    |                                                                                                            |     
|                              |    | Condensed Consolidated Statements of Operations and
      Comprehensive Income (Loss) for the Three Months | 5   
|                              |    | Ended March 31 2009 and 2008 (unaudited)                                                                   |     
|                              |    |                                                                                                            |     
|                              |    | Consolidated Statements of Cash Flows for the three
      months Ended March 31, 2009 and 2008 (unaudited) | 6   
|                              |    |                                                                                                            |     
|                              |    | Notes to Condensed Consolidated Financial
      Statements                                                 | 7   
|                              |    |                                                                                                            |     
|Item 2.                       |    | Managements Discussion and Analysis of Financial
      Condition and Results of Operations                | 17  
|                              |    |                                                                                                            |     
|Item 3.                       |    | Quantitative and Qualitative Disclosures About Market
      Risk                                           | 25  
|                              |    |                                                                                                            |     
|Item 4.                       |    | Controls and Procedures                                                                                    | 25  
|                              |   
|PART II. OTHER INFORMATION    |   
|                              |    |                                                                                                            |     
|Item 1.                       |    | Legal Proceedings                                                                                          | 26  
|                              |    |                                                                                                            |     
|Item 1a.                      |    | Risk Factors                                                                                               | 26  
|                              |    |                                                                                                            |     
|Item 4                        |    | Submission of Matters to a Vote of Security
      Holders                                                  | 26  
|                              |    |                                                                                                            |     
|Item 6.                       |    | Exhibits                                                                                                   | 26  
|                              |    |                                                                                                            |     
|Signatures                    | 28

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, 2008 filed with the Commission on March 20, 2009 and elsewhere in
this quarterly report on Form 10-Q.

3

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**INTELLIGROUP,
INC.****CONDENSED CONSOLIDATED
BALANCE SHEETS****AS OF MARCH
31, 2009 AND DECEMBER 31, 2008**(In
thousands except par value)

|                                                                               |  | March 31    |         | **December 31**
|------------------------------------------------------------------------------ |  | ----------- | ------- | ---------------
|                                                                               |  | 2009        |         | **2008**       
|                                                                               |  | (Unaudited) |         |                
|**ASSETS**                                                                     |  |             |         |                
|CURRENT
      ASSETS                                                           |  |             |         |                
|Cash and cash equivalents                                                      |  | $           | 14,150  |                
|Short-term
      Investments                                                   |  |             | 1,724   |                
|Accounts receivable, less allowance for doubtful accounts of $1,844
      and  |  |             |         |                
|$1,996 at March 31, 2009 and December 31, 2008,
      respectively             |  |             | 23,138  |                
|Unbilled services, less allowance for doubtful accounts of $20 as
      at     |  |             |         |                
|March 31, 2009
      and December 31, 2008                                     |  |             | 5,241   |                
|Deferred tax asset, current portion                                            |  |             | 865     |                
|Prepaid expenses
      and Prepaid Taxes                                       |  |             | 1,207   |                
|Other current assets                                                           |  |             | 584     |                
|Total current
      assets                                                     |  |             | 46,909  |                
|Property and equipment, net                                                    |  |             | 4,404   |                
|Goodwill and
      Intangibles                                                 |  |             | 1,853   |                
|Restricted Cash & Investments                                                  |  |             | 1,895   |                
|Deferred taxes
      and other assets                                          |  |             | 2,065   |                
|Total Assets                                                                   |  | $           | 57,126  |                
|                                                                              
|LIABILITIES AND SHAREHOLDERS' EQUITY                                           |  |             |         |                
|CURRENT
      LIABILITIES                                                      |  |             |         |                
|Line of credit borrowings                                                      |  | $           | 125     |                
|Accounts
      payable                                                         |  |             | 5,074   |                
|Accrued payroll and related taxes                                              |  |             | 9,663   |                
|Accrued expenses
      and other current liabilities                           |  |             | 4,031   |                
|Deferred revenue, current portion                                              |  |             | 1,485   |                
|Capital lease
      and deferred rent, current portion                         |  |             | 725     |                
|Total current liabilities                                                      |  |             | 21,103  |                
|Obligations
      under capital lease, net of current portion                  |  |             | 375     |                
|Deferred revenue, net of current portion                                       |  |             | 395     |                
|Other long-term
      liabilities                                              |  |             | 1,096   |                
|Total Liabilities                                                              |  |             | 22,969  |                
|SHARE
      HOLDERS' EQUITY                                                    |  |             |         |                
|Preferred stock, $.01 par value, 5,000 shares authorized, none
      issued or |  |             |         |                
|outstanding                                                                    |  |             | -       |                
|                                                                              
|Common stock, $.01 par value, 65,000 shares authorized at March 31,
      2009 |  |             |         |                
|and December 31, 2008 and 41,529 and 42,114 shares issued
      and            |  |             |         |                
|outstanding at March 31, 2009 and December 31, 2008,
      respectively        |  |             | 415     |                
|Additional
      paid-in capital                                               |  |             | 71,412  |                
|Accumulated deficit                                                            |  |             | (33,323 | )              
|Accumulated
      other comprehensive loss                                     |  |             | (4,347  | )              
|                                                                               |  |             |         |                
|Total shareholders equity                                                     |  |             | 34,157  |                
|                                                                               |  |             |         |                
|Total liabilities and shareholders
      equity                               |  | $           | 57,126  |                

See accompanying notes

4

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

|                                              |  | THREE MONTHS ENDED MAR 31,
|--------------------------------------------- |  | --------------------------
|                                              |  | 2009                      
|                                              |  | (Unaudited)               
|Revenue                                       |  | $                         
|Cost of
      revenue                         |  |                           
|Gross profit                                  |  |                           
|                                             
|Selling, general and administrative expenses  |  |                           
|Depreciation and
      amortization           |  |                           
|Total operating expenses                      |  |                           
|                                             
|Operating Income                              |  |                           
|                                             
|Interest income                               |  |                           
|Interest
      expense                        |  |                           
|Foreign currency transaction gain (loss), net |  |                           
|Other
      income                            |  |                           
|                                             
|Income before income taxes                    |  |                           
|Provision for
      income taxes              |  |                           
|Net Income                                    |  | $                         
|                                             
|Basic net income per share                    |  | $                         
|Diluted net
      income per share            |  | $                         
|                                             
|Weighted average no. of common shares         |  |                           
|outstanding                                   |  |                           
|- Basic                                       |  |                           
|- Diluted                                     |  |                           
|                                             
|Comprehensive income (loss)                   |  |                           
|Net
      Income                              |  | $                         
|Other comprehensive loss                      |  |                           
|Currency translation adjustments              |  |                           
|                                             
|Comprehensive Income / ( loss)                |  | $                         

See accompanying notes.

5

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INTELLIGROUP,
INC.CONSOLIDATED STATEMENTS OF CASH
FLOWSFOR THREE MONTH ENDED MARCH 31, 2009 AND 2008(USD in
thousands)

|                                                               |  | THREE MONTHS ENDED MAR 31,
|-------------------------------------------------------------- |  | --------------------------
|                                                               |  | 2009                      
|                                                               |  | (Unaudited)               
|Cash flows from operating activities:                          |  |                           
|Net Income                                                     |  | $                         
|Adjustments to reconcile net loss to net                       |  |                           
|Cash provided by operating activities:                         |  |                           
|Depreciation and amortization                                  |  |                           
|Provision for doubtful accounts and
      advances             |  |                           
|Stock compensation expense                                     |  |                           
|Exchange gain (Unrealized)                                     |  |                           
|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                                               |  |                           
|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                                       |  |                           
|Net cash used in investing activities                          |  | $                         
|                                                              
|Cash flows from financing activities:                          |  |                           
|Principal payments under capital leases                        |  | $                         
|Stock Repurchase                                               |  |                           
|Net change in line of credit borrowings                        |  |                           
|Net cash (used in) provided by financing activities            |  | $                         
|Effect of
      foreign currency exchange rate changes on cash |  | $                         
|                                                              
|Net increase 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) March 31, 2009 AND 2008

NOTE 1- BASIS OF PRESENTATION

The condensed consolidated financial
statements and accompanying financial information as of March 31, 2009 and for
the three months ended March 31, 2009 and 2008 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, 2008.

The
amounts for the December 31, 2008 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, 2008.

The
results of the Companys operations for the three months ended March 31, 2009
are not necessarily indicative of the results of operations to be expected for
the full year ending December 31, 2009.

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 March 31, 2009 and 2008, respectively, options to purchase
2,902,817 and 402,582 shares of common stock were not included in the
computation of diluted earnings (loss) per share because inclusion would have
been anti-dilutive.

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 $1.3 million for the three months ended March 31,
2009 as opposed to an income tax expense of $0.3 million on a pretax income of
$2.2 million for the three months ended March 31, 2008. 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 $0.2 million of the amount deposited for the year ended March 31,
1998 while $0.2 million is pending to be received from the tax authorities for
the year ended March 31, 1999. 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 is under
litigation against this order and expects a favorable decision. This has,
however, been fully reserved for as at March 31, 2009.

7

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INTELLIGROUP, INC.NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED) March 31, 2009 AND 2008

NOTE 2-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

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
common control. 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.

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.

Goodwill and Intangibles

The
Company 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.

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
were no share-based payment awards granted in the three months ended March 31,
2009. 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:

8

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INTELLIGROUP, INC.NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED) March 31, 2009 AND 2008

NOTE 2-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

- 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(SAB) 107 and SAB 110 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 no options exercised during the three months ended March
31, 2009 and March 31, 2008.

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
3.25% as of March 31 2009, 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 March 31, 2009.

As of
March 31, 2009, 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 March 31, 2009.

The company is prohibited from
paying dividends under the terms of its credit agreement.

NOTE 4- RESTRICTED CASH AND
INVESTMENTS

The various components of restricted
cash consist of the following as on March 31, 2009:

| | Kind of Cash
      / Investment |  | Restricted
      against                     |  | in
      thousands
| | ------------------------------- |  | -------------------------------------------- |  | ------------------
| | Non convertible Debentures      |  | Lien against derivative contracts            |  | $                 
| | Bank
      Guarantees           |  | Against various
      statutory and customer |  |                   
| |                                 |  | related
      compliances                    |  |                   
| | Total                           |  |                                              |  | $                 

9

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INTELLIGROUP, INC.NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED) March 31, 2009 AND 2008

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 16.3 million Indian rupees (approximately
$322,000); (3) payment of monthly lease fees in the amount of 1.7 million Indian
rupees (approximately $35,000), subject to yearly five percent (5%) escalation;
and (4) monthly operations and maintenance fees of 0.5 million Indian rupees
(approximately $10,000). Rent paid for the three months ended March 31, 2009
towards such lease was 7.7 million rupees (approximately $155,000). There are no
advance lease rentals as of March 31, 2009.

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. The compensation cost that
has been charged against income for those plans was $0.2 million for the three
months ended March 31, 2009 and $0.3 million for the three month ended March 31,
2008. The Company did not recognize income tax benefit in the condensed
consolidated statement of operations and comprehensive loss for the first three
months of 2009 or 2008, due to its accumulated net operating losses. No options
were exercised during the three months ended March 31, 2009.

*Stock
Options:***

The fair
value of option grants is estimated on the date of grant using the Black-Scholes
option-pricing model. There were no grants issued during the three month period
ending March 31, 2009. The following weighted average assumptions are given only
for the purpose of comparison:

|                            | Three Months Ended
|--------------------------- | ------------------
|                            | 31-Mar            
|                            | 2009              
|Expected Volatility         | 75.36%            
|Expected
      Lives(years) | 6.0625            
|Risk free Interest Rate     | 1.99%             
|Expected
      Dividends    | 0%                

There were no grants during the
three months ended March 31, 2009. The weighted average grant date fair value of
options granted during the three months ended Mach 31, 2008 was
$1.56.

As of
March 31, 2009, there was $0.9 million of total unrecognized compensation cost
related to the stock options. That cost is expected to be recognized over the
next four years.

10

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INTELLIGROUP,
INC.NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED)March 31, 2009 AND 2008

NOTE 7- SHAREHOLDERS EQUITY
(Continued)

The
following table summarizes the share-based compensation expense for stock
options that were recorded in accordance with SFAS No. 123R for the three months
ended March 31, 2009 and 2008 (in thousands except per share information):

|                                                   | Three Months Ended
|-------------------------------------------------- | ------------------
|                                                   | Mar 31            
|                                                   | 2009              
|Cost of Revenue                                    | $                 
|Selling, general
      and administrative expenses | $                 
|Total share based compensation expense             | $                 

*Share Repurchase
Program:***

On
October 24 2008, our Board of Directors approved a share repurchase program of
up to $5,000,000 of the Company's common stock over an 18 month period ending
April 24, 2010. 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
has adopted a Rule 10b5-1 trading plan and intends to adopt additional Rule
10b5-1 trading plans 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 continue to repurchase
shares under the authorization or enter into additional 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
March 31, 2009, a total of 664,150 shares have been repurchased at an average
price of $1.52 out of which 584,850 shares were repurchased at an average price
of $1.51 during the quarter ended March 31, 2009. All the repurchased shares are
constructively retired.

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. This segment also covers our operations in the
  UAE.
- 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.

11

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INTELLIGROUP,
INC.NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED)March 31, 2009 AND 2008

NOTE 8- SEGMENT DATA AND GEOGRAPHIC
INFORMATION (Continued)

Accordingly, the Companys
consolidated operating results for the three months ended March 31, 2009 and
2008 are presented in the following geographic segments (in thousands):

|                                  | United
      States |   | India |        | Europe |        | Japan |       | Total
|--------------------------------- | ------------------- | - | ----- | ------ | ------ | ------ | ----- | ----- | -----
|Three Months ended March 31, 2009 |                     |   |       |        |        |        |       |       |      
|Revenue                           | 17,604              |   |       | 9,080  |        | 3,175  |       | 1,010 |      
|Operating Income / (Loss)         | 169                 |   |       | 1,177  |        | 586    |       | (122  | )    
|Income Tax
      Expense          | 1                   |   |       | 345    |        | 184    |       | -     |      
|Net Income / (Loss)               | 175                 |   |       | 680    |        | 253    |       | (331  | )    
|                                 
|As of March 31, 2009              |                     |   |       |        |        |        |       |       |      
|Property &
      Equipment, net   | 573                 |   |       | 2,772  |        | 1,005  |       | 54    |      
|Total Assets                      | 32,677              |   |       | 16,436 |        | 6,521  |       | 1,492 |      
|                                 
|Three Months ended March 31, 2008 |                     |   |       |        |        |        |       |       |      
|Revenue                           | 22,366              |   |       | 10,881 |        | 4,070  |       | 1,136 |      
|Operating Income / (Loss)         | 419                 |   |       | 950    |        | 228    |       | 109   |      
|Income Tax
      Expense          | (8                  | ) |       | 270    |        | 64     |       | -     |      
|Net Income / (Loss)               | 522                 |   |       | 719    |        | 279    |       | 342   |      
|                                 
|As of March 31, 2008              |                     |   |       |        |        |        |       |       |      
|Property &
      Equipment, net   | 562                 |   |       | 3,006  |        | 2,548  |       | 65    |      
|Total Assets                      | 34,996              |   |       | 18,590 |        | 10,913 |       | 2,282 |      

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
$45 million to $55 million as at March 31, 2009, 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.

12

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INTELLIGROUP, INC.NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED)March 31, 2009 AND 2008

NOTE 9- COMMITMENTS AND
CONTINGENCIES (Continued)

***Employment Agreements***

As of
March 31, 2009, 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 $1.8 million. In addition, the Companys wholly controlled and
majority owned subsidiary Intelligroup Asia Pvt. Ltd. (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.

NOTE 10- RECENT ACCOUNTING
PRONOUNCEMENTS

The
Company elected a partial deferral of SFAS No 157 under the provisions of SFAS
157-2, Effective Date of FASB Statement No. 157 (FSP 157-2) related to the
measurement of fair value used when evaluating goodwill, other intangible
assets, and other long-lived assets for impairment. We adopted the provisions of
this statement for non-financial assets and liabilities effective January 1,
2009. This adoption did not have impact on its Consolidated Financial
statements.

In
December 2007, the FASB issued FAS No.141 (revised 2007), Business Combinations
(SFAS 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 was adopted beginning January 1, 2009.
There was no significant impact on the Companys financial position or results
of operations as a result of the adoption of SFAS 141R.

In March
2008, the FASB issued SFAS No. 161,Disclosures about Derivative Instruments and Hedging Activities, an
amendment of FASB Statement No. 133(SFAS
161),which requires additional disclosures about the objectives of using derivative
instruments, the method by which the derivative instruments and related hedged
items are accounted for under FASB Statement No. 133 and its related
interpretations, and the effect of derivative instruments and related hedged
items on financial position, financial performance, and cash flows. SFAS 161
also requires disclosure of the fair values of derivative instruments and their
gains and losses in a tabular format. SFAS 161 is effective for financial
statements issued for fiscal years and interim periods beginning after November
15, 2008, with early adoption encouraged. The Company adopted this standard
effective January 1, 2009. The implementation of this standard did not have a
material impact on our consolidated financial statements. (Please see Note 11
below for the expanded disclosure regarding derivative instruments in accordance
with the pronouncement).

In April
2009, the FASB issued FSP SFAS 115-2 and FAS 124-2,Recognition and Presentation of Other-Than-Temporary
Impairments. This FSP amends the
other-than-temporary impairment guidance for debt securities to make the
guidance more operational and to improve the presentation and disclosure of
other-than-temporary impairments in the financial statements. The most
significant change the FSP brings is a revision to the amount of
other-than-temporary loss of a debt security recorded in earnings. FSP SFAS
115-2 and SFAS 124-2 are effective for interim and annual reporting periods
ending after June 15, 2009. 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.

In April
2009, the FASB issued FSP SFAS 157-4,Determining Fair Value When the Volume and Level of Activity for the
Asset or Liability Have Significantly Decreased and Identifying Transactions
That Are Not Orderly. This FSP provides
additional guidance for estimating fair value in accordance with FASB Statement
No. 157,Fair Value
Measurements, when the volume and level of
activity for the asset or liability have significantly decreased. This FSP also
includes guidance on identifying circumstances that indicate a transaction is
not orderly. This FSP emphasizes that even if there has been a significant
decrease in the volume and level of activity for the asset or liability and
regardless of the valuation technique(s) used, the objective of a fair value
measurement remains the same. Fair value is the price that would be received to
sell an asset or paid to transfer a liability in an orderly transaction (that
is, not a forced liquidation or distressed sale) between market participants at
the measurement date under current market conditions. FSP SFAS 157-4 is
effective for interim and annual reporting periods ending after June 15, 2009,
and is applied prospectively. 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.

13

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INTELLIGROUP,
INC.NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED)March 31, 2009 AND 2008

NOTE 10- RECENT ACCOUNTING
PRONOUNCEMENTS (Continued)

In April
2009, the FASB issued FSP FAS FAS 107-1 and APB 28-1,Interim Disclosures about Fair Value of Financial
Instruments.This FSP amends FASB Statement
No. 107,Disclosures about Fair Value of
Financial Instruments, to require disclosures
about fair value of financial instruments for interim reporting periods of
publicly traded companies as well as in annual financial statements. This FSP
also amends APB Opinion No. 28,Interim
Financial Reporting, to require those
disclosures in summarized financial information at interim reporting periods.
FSP FAS 107-1 and APB 28-1 are effective for interim and annual reporting
periods ending after June 15, 2009. 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 March 31, 2009:

|                                         |       |  | **Fair
      Value Measurements at Reporting Date Using**
|---------------------------------------- | ----- |  | ---------------------------------------------------------
|                                         |       |  | Quoted Prices in                                         
|                                         |       |  | Active Markets for                                       
|                                         |       |  | Identical Assets                                         
|                                         | Total |  | (Level
      1)                                          
|Assets:                                  |       |  |                                                          
|Short term Investments (Note a)          | 1,724 |  | -                                                        
|Bank guarantees & Term Deposits (Note b) | 144   |  | -                                                        
|Investments (Note c)                     | 1,751 |  | -                                                        
|Total                                    | 3,618 |  | -                                                        
|                                        
|Liabilities:                             |       |  |                                                          
|Derivative
      Instruments (Note d)    | 3,360 |  | -                                                        
|Total                                    | 3,360 |  | -                                                        

| | a) | Represents Term deposits and is
      reported under the head Short Term Investments in the current assets on
      the consolidated balance sheet as of March 31, 2009. The fair value in the
      table is the face value of the instruments.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b) | Reported as Restricted cash and
      Investments on the consolidated balance sheet as of March 31, 2009.
      (Please refer note 4  Restricted cash and investments.) The fair value is
      the face value of the instruments.             
| | c) | Represents non convertible
      debentures reported under Restricted cash and Investments on the
      consolidated balance sheet as of March 31, 2009. The fair value is derived
      through external valuation.                            
| | d) | Reported under current
      liabilities ($3.02 million) and other long term liabilities ($0.34
      million) on the consolidated balance sheets. The fair value is derived
      through external valuation based on market related
  inputs.   

Derivative
Instruments:

The Company 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 contracts do not qualify for hedge
accounting under SFAS 133. Accordingly, these outstanding derivatives are
recognized on the balance sheet at fair value and changes in fair value from
these contracts are recorded in foreign currency transaction gain / (loss), net,
in the condensed consolidated statement of operations and comprehensive income
(loss). During the three months ended March 31, 2009, the Company has not
entered into any new foreign currency forward or option contracts. As of March
31, 2009, a total of $14 million of notional amounts under option contracts and
$8.6 million under forward contracts remain outstanding and are expected to be
settled monthly over the period until the maturity date the last of which is May
2010. The Company has an option to settle its option contracts in the event the
contracted rates are more favorable than the prevalent spot rates.

14

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INTELLIGROUP,
INC.NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED)March 31, 2009 AND 2008

NOTE 11- FINANCIAL INSTRUMENTS
(Continued)

At March 31,
2009, summary information about the instruments is as follows.

|                     |  | Option
      Contracts       |  | Forward
      Contracts     
|-------------------- |  | ---------------------------- |  | ----------------------------
|Notional Amount      |  | $14 million                  |  | $8.6 million                
|Rates                |  | INR
    43.45                |  | INR 43.37 to
      44.93    
|Effective date       |  | 5/18/2007                    |  | 6/6/08, 6/30/2008, 8/14/2008
|                     |  |                              |  | and 8/20/2008               
|Maturity
      Dates |  | 04/28/2009 to
      05/26/10 |  | 04/30/2009 to
      12/31/09
|Fair Value           |  | $ (2.2) million              |  | $ (1.2) million             

The Company does not enter into foreign exchange contracts for trading or
speculative purposes.

The fair values of derivative instruments in the consolidated balance
sheet as of March 31, 2009 are as follows:

|                                                       | Asset / (Liability) Derivatives  
|------------------------------------------------------ | ---------------------------------
|                                                       | Balance Sheet                    
|                                                       | Location                         
|Derivative Instruments not
      designated as hedges: |                                  
|Fair value of foreign exchange
      contracts         | Accounts Payable                 
|                                                       | Other Long
      Term Liabilities
|Fair Value
      Total                                 |                                  

The fair value is derived through market related inputs and external
valuation.

The effect of derivative instruments on the consolidated statement of
operations for the three months ended March 31, 2009 is as follows:

|                                                       |                                                       | Amount of gain
|------------------------------------------------------ | ----------------------------------------------------- | --------------
|                                                       |                                                       | / (loss)      
|                                                       | Location of
      gain / (loss) recognized on the     | recognized    
|                                                       | Income Statement                                      | ('000s)       
|Derivative Instruments not
      designated as hedges: |                                                       |               
|Foreign
      Exchange Contracts                       | Foreign
      currency transaction gain / (loss), net | $             
|Total                                                  |                                                       | $             

Please also refer Note 13 below for the various
components of foreign currency transaction gain /
(loss) as reported on thecondensed consolidated statement of operations and comprehensive income
(loss) for the three month periods ending March
31, 2009 and 2008.

15

---

INTELLIGROUP,
INC.NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED)March 31, 2009 AND 2008

NOTE 12- 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 Plan cost includes the following components:

|                                |  | Three Months Ended
|------------------------------- |  | ------------------
|                                |  | Mar 31            
|                                |  | 2009              
|Service Cost                    |  | $                 
|Interest
      Cost             |  |                   
|Actuarial (Gain) / Loss         |  |                   
|Expected Return
      on Assets |  |                   
|Net Gratuity Plan Cost          |  |                   

NOTE 13-FOREIGN CURRENCY TRANSACTION GAIN / (LOSS),
NET

Foreign currency transaction gain / (loss) comprises of two components 
i) FAS 52 translation gains or losses on the Accounts receivable denominated in
other than the reporting currency and the mark to market gains or losses of the
derivative instruments as follows (USD in thousands)

|                                                       | **Three month periods**
|------------------------------------------------------ | -----------------------
|                                                       | ended March 31         
|                                                       | 2009                   
|Foreign currency translation/
      realization gain   | $                      
|Derivative unrealized
      loss                       |                        
|Derivative
      realized (loss) / gain                |                        
|Total
      foreign currency transaction gain / (loss) | $                      

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 March 31, 2009, the Company recorded other comprehensive loss due
to translation adjustment of approximately $1 million on account of currency
fluctuations in Asia and Europe. Other comprehensive loss of approximately $0.5
million was recorded for the three months ended March 31, 2008.

16

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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 continuation of the current global economic
  crisis or further deterioration of the global economy which has and may
  continue to impact demand for our
  services;
- 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;
- future legislation impacting the off shore
  business model and increased anti-off-shoring sentiment in the United States
  and other jurisdictions could significantly affect the demand for our services
  and our customer delivery model.
- inability to maintain access to external
  funding;
- currency fluctuations may negatively impact our
  financial results, and this may in turn discourage
  investment.
- 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 $45 million to $55 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 9 to the financial
  statements on in our annual report on Form 10-K for the year ended December
  31, 2008; and
- the factors listed under Item 1A. Risk Factors
  in our annual report on Form 10-K for the year ended December 31, 2008 and
  other reports that we file with the Securities and Exchange
  Commission.

17

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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, supports and manages enterprise resource
planning (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 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 ERP systems, with their businesses. While historically ERP
providers had focused on providing solutions for large market companies with
revenues of over $5 billion 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 three months ended
March 31, 2009 and 2008, revenue derived from projects under fixed price
contracts represented approximately 34% and 28%, respectively, of the Companys
total revenue. No single fixed price project was material to the Companys
business during the three months ended March 31, 2009 and 2008. 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.

18

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INTELLIGROUP, INC.

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

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
three months ended March 31, 2009 and 2008, the Companys ten largest customers
accounted for in the aggregate approximately 36% and 40% of its revenue,
respectively. During the three months ended March 31, 2009 and 2008, no single
customer accounted for 10% or more of revenues. 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 months ended March 31, 2009 and 2008, 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 and Oracle.

|                      | Percentage of Revenues
|--------------------- | ----------------------
|                      | Three Months ended    
|                      | Mar 31, 2009          
|SAP                   | 77%****               
|Oracle
      Universe | 14%****               
|e-Business            | 5%****                
|Others                | 4%****                
|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, Japan and the United Arab
Emirates.

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, 2008.

19

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INTELLIGROUP, INC.

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

Results of Operations  Consolidated
 Three months ended March 31, 2009 compared to three months ended March 31,
2008.

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

2009
    
    2008Revenue
    100.0
    %
    
    100.0
    %Cost of
      Revenues
    68.8
    
    
    70.3Gross Profit
    31.2
    
    
    29.7Selling general and administrative expenses
    23.5
    
    
    23.4Depreciation and
      amortization
    1.8
    
    
    1.9Total operating
    expenses
    25.3
    
    
    25.3Operating Income
    5.9
    
    
    4.4Interest Expense
    0.0
    
    
    (0.4
    )Interest
      Income
    0.1
    
    
    0.3Foreign currency transaction gain / (loss), net
    (2.0
    )
    
    0.9Other
      Income
    0.3
    
    
    0.5Income before income taxes
    4.3
    
    
    5.7Income tax
      provision
    1.7
    
    
    0.9Net income
    2.6
    %
    
    4.8
    %


*Three Months Ended March 31, 2009 Compared to Three Months Ended
March 31, 2008.*

The
following discussion compares the consolidated results of operations for the
Three months ended March 31, 2009 and 2008.

Revenue. Total revenue decreased by
19.7% or $7.6 million from $38.4 million for the three months ended March 31,
2008 to $30.9 million for the three months ended March 31, 2009. The decrease
was primarily due to the impact by the challenging global economic environment,
which led many of our customers and prospective customers to defer
decision-making on a range of IT services initiatives, particularly shorter-term
projects.

Cost
of revenue and gross profit. The Companys
cost of revenue decreased by 21.4% or $5.8 million, from $27.0 million for the
three months ended March 31, 2008 to $21.2 million for the three months ended
March 31, 2009. The decrease was primarily due to the decrease in headcount and
related compensation and travel related costs as well as improved utilization
rates. The Companys gross profit decreased by 15.8% or $1.8 million, from $11.4
million for the three months ended March 31, 2008 to $9.6 million for the three
months ended March 31, 2009. Gross margin increased from 29.7% for the three
months ended March 31, 2008 to 31.2% for the three months ended March 31, 2009.
The decrease in gross profit was a result of decrease in the revenues and the
increase in gross margin was primarily due to the combination of decreased head
count combined with improved resource management and utilization.

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 decreased by 19.3%, or $1.7
million, from $9.0 million for the three months ended March 31, 2008 to $7.2
million for the three months ended March 31, 2009. The decrease was as a result
of better managing the staff levels for our selling and administrative functions
and the related overhead cost structure to address the decline in the
revenues.

Depreciation and amortization expenses.The Company recorded depreciation and amortization expenses of $0.5
million for the three months ended March 31, 2009 compared to $0.7 million for
the three months ended March 31, 2008. The decrease is primarily due to the
reduced amortization expense as a result of the finalization of purchase price
allocation in September 2008 relating to the Novasoft acquisition.

20

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INTELLIGROUP, INC.

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

*Interest
Expense:*For the three month ended March 31, 2009 and 2008, the company
recorded $0.02 million and $0.2 million towards interest expense. The decrease
is primarily as a result of renegotiating the line of credit in May 2008
together with the improved cash position in Q1 09 as compared to Q1 08.

Foreign
Currency gain (loss). For the three month
ended March 31, 2009, the Company recorded foreign currency transaction losses
of approximately $0.6 million, primarily the result of marking to market value
of our foreign currency forward and option contracts due to strengthening of the
U.S. Dollar (USD) against the Indian Rupee (INR) in particular. We recorded
transaction gains of approximately $0.4 million for the three month ended March
31 2008, primarily the result of the mark to market gains.

Interest
and Other Income.Interest and other income
was approximately $0.1 million for the three month ended March 31, 2009 as
compared to $0.3 million for the three month ended March 31, 2009. The decrease
was primarily due to the lack of sub lease income in Q1 09.

Income tax
provision. The Company recorded an income tax
provision of $0.5 million on a pretax income of $1.3 million for the three
months ended March 31, 2009 as opposed to an income tax provision of $0.3
million on a pretax income of $2.2 million for the three months ended March 31,
2008. The increase in the tax expense is as result of exhaustion of carry
forward losses in Europe segment.

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. This segment also covers our operations in the
  UAE;
- 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; and
- Japan  includes the operations of the Company in
  Japan. The office is located in Tokyo, Japan.

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.

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 March 31, 2009
Compared to Three Months Ended March 31, 2008.

The following discussion compares
the segment results of operations for the three months endedMarch 31, 2009and 2008.

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

|              |  | Three months ended March
      31,
|------------- |  | ----------------------------------
|              |  | 2009                              
|              |  |                                   
|              |  | Revenues                          
|United States |  | $                                 
|India         |  |                                   
|Europe        |  |                                   
|Japan         |  |                                   
|Total         |  | $                                 

US
revenue decreased by 21.3% or $4.8 million, from $22.4 million for the three
months ended March 31, 2008 to $17.6 million for the three months ended March
31, 2009. Operating income for US segment reduced by $0.25 million from $0.42
million for the three month ended March 31, 2008 to $0.17 million for the three
months ended March 31, 2009. The decrease in revenue and operating income was
primarily due to the impact by the challenging global economic environment,
which led many of our customers and prospective customers to defer
decision-making on a range of IT services initiatives, particularly shorter-term
projects.

India
revenue decreased by 16.6% or $1.8 million, from $10.9 million for the three
months ended March 31, 2008 to $9.1 million for the three months ended March 31,
2009. Operating income for India segment increased by $0.23 million from $0.95
million for the three month ended March 31, 2008 to $1.18 million for the three
months ended March 31, 2009. The decrease in revenues was attributable to global
economic slowdown and reduced demand during the period from customers in the
middle east, region in particular. The increase in operating income is
attributable primarily due to strengthening of US Dollar against the India Rupee
in combination with improvements in operational efficiencies and an increase in
the percentage of revenue generated by providing offshore development and
support services (which can be provided at a higher gross margin level than the
services provided to local customers) during the three months ended March 31,
2009, as compared to the three month period ended March 31, 2008.

Europe
revenue decreased by 22% or $0.9 million, from $4.1 million for the three months
ended March 31, 2008 to $3.2 million for the three months ended March 31, 2009.
Operating income for UK segment increased by $0.36 million from $0.23 million
for the three month ended March 31, 2008 to $0.59 million for the three months
ended March 31, 2009. The decrease in revenues was attributable to global
economic slowdown and reduced demand during the period for ERP products in the
local markets. The increase in operating income is attributable primarily due to
strengthening of the U.S. Dollar against European currencies, the British Pound
in particular, along with improved operational efficiencies during the three
months ended March 31, 2009, as compared to the three month period ended March
31, 2008.

Japan
revenue decreased marginally by $0.1 million, from $1.1 million for the three
months ended March 31, 2008 to $1.0 million for the three months ended March 31,
2009 while operating income reduced by $0.23 million from an operating income of
$0.11 million during the three month period ended March 31, 2008 to an operating
loss of $0.12 million during the three month period ended March 31, 2009. The
decrease in operating income was primarily due to strengthening of the Japanese
Yen against the U.S. Dollar during the three months ended March 31, 2009 as
compared to the three month period ended March 31, 2008.

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

We had
cash and cash equivalents of $14 million as at March 31, 2009 net of amounts
outstanding against the line of credit as compared to $10 million as at December
31, 2008. We had working capital of $25.8 million at March 31, 2009 and $25.5
million as at December 31, 2008.

Cash
generated from operating activities was $6.1 million for the three months ended
March 31, 2009, resulting primarily from the decrease in accounts receivable and
unbilled balances which amount together to $5.7 million. Cash generated from
operating activities was $1.2 million for the three months ended March 31, 2008
resulting primarily from the net profit of $1.8 million for the
period.

The
Company invested $0.1 million and $0.3 million in computer equipment,
internal-use computer software and office furniture, fixtures and leasehold
improvements during the three months ended March 31, 2009 and 2008,
respectively. Net cash used for investments was $0.74 million during the three
months ended March 31, 2009 while there was no purchase or sale of investment
instruments during the three months ended March 31, 2008.

Cash used
in financing activities was $1.1 million during the three month ended March 31,
2009 while cash provided by financing activities was $1.3 million during the
three months ended March 31, 2008. The increase in cash used in financing
activities resulted primarily from cash used to repurchase shares in according
with our share repurchase program. (Please refer note 7 above Share Holders
Equity and Part II, item 2 below for additional details on the share repurchase
program).

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
3.25% as of March 31, 2009, 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 March 31, 2009.

As of
March 31, 2009, 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 March 31, 2009.

*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 and 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. 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 2009 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.

23

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INTELLIGROUP, INC.

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

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.

Contractual Obligations and Other
Commercial Commitments

There have been no material changes
to the contractual obligations and other commercial commitments previously
disclosed in our annual report on Form 10-K for the period ended December 31,
2008.

Business Outlook

Our
business and financial condition depend on the health of the general economy, as
well as the demand for information technology services, particularly in the
United States as we derive a significant portion of our revenue from clients in
the United States. Our revenue and profits are driven by demand for our
services. The United States economy is currently in a recession and we continue
to be impacted by the challenging global economic environment, which led many
companies to defer decision-making on a range of IT services projects,
particularly affecting smaller, shorter-term projects where we have primarily
focused our efforts in order to develop inroads with new customers. A continuing
deterioration in economic activity in the United States could adversely affect
demand for our services, which may materially and adversely impact our revenue
and profitability. During economic cycles in which many companies are
experiencing financial difficulties or uncertainty, clients and potential
clients may cancel or continue delay spending on marketing, technology and other
business initiatives. We have seen the impact of such decline in demand for our
services as reflected by the 19.7% year over year decline in our revenue. To
date, we have been able to effectively manage our cost structure to minimize the
impact of declining revenues on our operating income, which was $1.8 million for
the first quarter of 2009 compared with $1.7 million in the first quarter of
2008. However, if the current downturn in worldwide economic conditions
continues or economic conditions worsen, particularly in the United States, we
may not be able to continue to reduce costs to a level sufficient to minimize
the impact of any possible further revenue declines on our operating income and
any of these events could materially and adversely impact our business,
financial condition and results of operations.

24

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INTELLIGROUP, INC.

Item 3. Quantitative and Qualitative
Disclosures about Market Risk.

There
have been no material changes to the information on quantitative and qualitative
disclosures about market risk provided in our annual report on Form 10-K for the
period ended December 31, 2008.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

We are
responsible for maintaining disclosure controls and procedures designed to
ensure that information required to be disclosed in our 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 our management, including our
chief executive officer and chief financial officer, as appropriate, to allow
for timely decisions regarding required disclosures. Our management, with the
participation of our Chief Executive Officer and Chief Financial Officer,
evaluated the effectiveness of our 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 our 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 such evaluation, our principal
executive officer and principal financial officer have concluded that, as of
March 31, 2009, our 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 March 31, 2009 that materially effected or are reasonably likely
to materially affect, our internal control over financial reporting.

25

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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, 2008.

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

|ISSUER
      REPURCHASE OF EQUITY SECURITIES
|--------------------------------------------
|                                            
|                                            
|                                            
|                                            
|                                            
|                                            
|Period                                      
|Jan 1 to Jan 31
      2009                  
|Feb 1 to Feb 28
      2009                  
|Mar 1 to Mar 31
      2009                  

*Share Repurchase
Program*

The
purchases disclosed in the above table were made under the share repurchase
program which was announced on October 29, 2008. Pursuant to the approval of our
Board of Directors, we are authorized to purchase under this share repurchase
program up to $5,000,000 of our common stock over an 18 month period ending
April 24, 2010. The share repurchase program will be funded using our working
capital and authorizes us to repurchase shares from time to time through open
market or privately negotiated transactions. We also have adopted a Rule 10b5-1
trading plan and intend to adopt additional Rule 10b5-1 trading plans that will
allow us 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. We are not
obligated to continue to repurchase shares under the authorization or enter into
additional Rule 10b5-1 trading plan and the timing; actual number and value of
shares purchased will depend on many factors, including our cash flow and the
liquidity and price performance of our shares.

Item 3. Defaults Upon Senior
Securities

There are no
matters to report subject to this Item for the period ended March 31, 2009.

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

There are no matters to report subject to this Item for the period ended
March 31, 2009.

Item 5. Other Information

There are no matters to report subject to this Item for the period ended
March 31, 2009.

Item 6. Exhibits

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

26

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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*       |  | Amendment No. 4 to employment agreement
      between Vikram Gulati and Intelligroup, Inc. (Incorporated by reference to
      Exhibit 10.1 of the Companys current report on Form 8-K dated March 4,
      2009, filed with the Securities and Exchange Commission on March 9,
      2009).                                                                                                                                                                                                                                           
|           
|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.

27

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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 14th day of May 2009.

|                   | INTELLIGROUP, INC.
|------------------ | ------------------
|                   |                   
|Date: May 14, 2009 | By:               
|                   |                   
|                   |                   
|                   |                   
|                   |                   
|Date: May 14, 2009 | By:               
|                   |                   
|                   |                   
|                   |                   

28

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