SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 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, 2001
                           Commission File No. 0-20943

                               Intelligroup, Inc.
             ------------------------------------------------------
             (Exact Name of Registrant as Specified in Its Charter)

          New Jersey                                     11-2880025
-------------------------------             ------------------------------------
(State or Other Jurisdiction of             (I.R.S. Employer Identification No.)
Incorporation or Organization)

                  499 Thornall Street, Edison, New Jersey 08837
--------------------------------------------------------------------------------
(Address of Principal Executive Offices)                              (Zip Code)

                                 (732) 590-1600
                         -------------------------------
                         (Registrant's Telephone Number,
                              Including Area Code)

     Indicate  by  checkmark  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:
                  ---                                       ---

     Indicate the number of shares  outstanding of each of the Issuer's  classes
of common stock, as of May 1, 2001:

       Class                                              Number  of  Shares
       -----                                              ------------------

Common Stock, $.01 par  value                                 16,630,125


<PAGE>


                       INTELLIGROUP, INC. AND SUBSIDIARIES

                                TABLE OF CONTENTS
                                -----------------

                                                                            Page
                                                                            ----
PART I.  FINANCIAL INFORMATION

      Item 1.  Consolidated Financial Statements........................      1

               Consolidated Balance Sheets as of March 31, 2001
               (unaudited) and December 31, 2000........................      2

               Consolidated Statements of Operations and Comprehensive
               Income (Loss) for the Three Months Ended March 31, 2001
               and 2000 (unaudited).....................................      3

               Consolidated Statements of Cash Flows for the Three
               Months Ended March 31, 2001 and 2000 (unaudited).........      4

               Notes to Consolidated Financial Statements (unaudited)...      5

      Item 2.  Management's Discussion and Analysis of
               Financial Condition and Results of Operations............      11

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

PART II.  OTHER INFORMATION

      Item 1.  Legal Proceedings........................................      21

      Item 6.  Exhibits and Reports on Form 8-K.........................      21

SIGNATURES..............................................................      22


                                      -i-
<PAGE>



















                          PART I. FINANCIAL INFORMATION

                    ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS




                                       -1-
<PAGE>


                       INTELLIGROUP, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                      MARCH 31, 2001 AND DECEMBER 31, 2000
                                   (UNAUDITED)

                                               MARCH 31, 2001  DECEMBER 31, 2000
                                               --------------  -----------------
                     ASSETS
Current Assets:
  Cash and cash equivalents..................    $ 1,798,000    $ 1,327,000
  Accounts receivable, less allowance for
     doubtful accounts of $1,587,000 and
     $2,061,000 at March 31, 2001 and
     December 31, 2000, respectively.........     21,822,000     22,438,000
  Unbilled services..........................      3,908,000      5,933,000
  Income taxes receivable....................        384,000        384,000
  Deferred tax asset.........................      1,348,000      1,348,000
  Other current assets.......................      3,828,000      4,820,000
  Note receivable - SeraNova.................     10,870,000     11,910,000
                                                  ----------     ----------

      Total current assets...................     43,958,000     48,160,000

  Property and equipment, net................     10,587,000      9,650,000
  Intangible assets, net.....................      4,618,000      4,732,000
  Other assets...............................      7,495,000      4,826,000
                                                  ----------     ----------
                                                 $66,658,000    $67,368,000
                                                 ===========    ===========
      LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
  Accounts payable...........................    $ 7,365,000    $ 6,849,000
  Accrued payroll and related taxes..........      5,003,000      6,480,000
  Accrued expenses and other liabilities.....      3,968,000      5,345,000
  Income taxes payable.......................        299,000        288,000
  Current portion of long term debt and
     obligations under capital leases........      8,776,000      5,623,000
                                                  ----------     ----------

        Total current liabilities............     25,411,000     24,585,000

Deferred tax liability.......................        545,000        545,000
                                                  ----------     ----------
Obligations under capital leases, less current
   portion...................................        799,000      1,037,000
                                                  ----------     ----------

Commitments and contingencies

Shareholders' Equity
  Preferred stock, $.01 par value, 5,000,000
     shares authorized,
     none issued or outstanding..............             --             --
  Common stock, $.01 par value, 25,000,000
     shares authorized, 16,630,000 shares issued
     and outstanding at March 31, 2001 and
     December 31, 2000.......................        166,000        166,000
  Additional paid-in capital.................     41,366,000     41,366,000
  Retained earnings..........................      2,096,000      1,908,000
  Currency translation adjustments...........     (3,725,000)    (2,239,000)
                                                  ----------     ----------
      Total shareholders' equity ............     39,903,000     41,201,000
                                                  ----------     ----------
                                                 $66,658,000    $67,368,000
                                                 ===========    ===========

   The accompanying notes to consolidated financial statements are an integral
                          part of these balance sheets.



                                      -2-
<PAGE>

                       INTELLIGROUP, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                         AND COMPREHENSIVE INCOME (LOSS)
               FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000
                                   (UNAUDITED)


                                              THREE MONTHS ENDED MARCH 31,
                                              ----------------------------
                                                   2001          2000
                                              -------------   ------------
Revenue....................................     $30,037,000   $29,051,000
Cost of sales..............................      20,872,000    19,184,000
                                                -----------   -----------
   Gross profit............................       9,165,000     9,867,000
                                                -----------   -----------
Selling, general and administrative
   expenses................................       8,118,000    12,090,000
Depreciation and amortization..............         945,000       847,000
                                                -----------   -----------
   Total operating expenses................       9,063,000    12,937,000
                                                -----------   -----------
   Operating income (loss).................         102,000    (3,070,000)
Interest income (expense), net.............         121,000       (29,000)
                                                -----------   -----------
Income (loss) from continuing operations
   before income tax provision (benefit)...         223,000    (3,099,000)
Income tax provision (benefit).............          35,000      (991,000)
                                                -----------   -----------
Income (loss) from continuing operations...         188,000    (2,108,000)
Loss from discontinued operations, net of
   tax benefit of  $0 and $(1,110,000),
   respectively............................              --    (3,079,000)
                                                -----------   -----------
Net income (loss)..........................     $   188,000   $(5,187,000)
                                                ===========   ===========
Earnings per share:
   Basic earnings per share:
      Income (loss) from continuing
         operations .......................     $      0.01   $     (0.13)
      Discontinued operations .............              --         (0.19)
                                                -----------   -----------
         Net income (loss) per share.......     $      0.01   $     (0.32)
                                                ===========   ===========
      Weighted average number of Common
         shares - Basic....................      16,630,000    16,162,000
                                                ===========   ===========

   Diluted earnings per share:
      Income (loss) from continuing
         operations........................     $      0.01   $     (0.13)
      Discontinued operations .............              --         (0.19)
                                                -----------   -----------
         Net income (loss) per share.......     $      0.01   $     (0.32)
                                                ===========   ===========
      Weighted average number of Common
         shares - Diluted..................      16,662,000    16,162,000
                                                ===========   ===========

Comprehensive Income (Loss)
---------------------------
Net income (loss).............................  $   188,000   $(5,187,000)
Other comprehensive income (loss) -
      Currency translation adjustments........   (1,486,000)       21,000
                                                -----------   -----------
Comprehensive loss............................  $(1,298,000)  $(5,166,000)
                                                ===========   ===========

   The accompanying notes to consolidated financial statements are an integral
                            part of these statements.


                                      -3-
<PAGE>

                      INTELLIGROUP, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000
                                   (UNAUDITED)

                                                 THREE MONTHS ENDED MARCH 31,
                                                 ----------------------------
                                                        2001          2000
                                                 -------------   ------------
Cash flows from operating activities:
  Net income (loss)..............................   $ 188,000     $(5,187,000)
  Less: Loss from discontinued operations, net of
   tax...........................................          --      (3,079,000)
                                                    ---------     -----------
  Income (loss) from continuing operations.......     188,000      (2,108,000)
  Adjustments to reconcile income (loss) from
   continuing operations to net cash provided by
   operating activities of continuing operations:
     Depreciation and amortization...............   1,053,000         847,000
     Provision for doubtful accounts.............     453,000       1,119,000
     Deferred income taxes.......................          --      (1,347,000)
  Changes in operating assets and liabilities:
   Accounts receivable...........................     163,000       4,773,000
   Unbilled services.............................   2,025,000         235,000
   Other current assets..........................     992,000        (110,000)
   Other assets..................................       9,000          21,000
   Accounts payable..............................     516,000        (989,000)
   Accrued payroll and related taxes.............  (1,477,000)      2,072,000
   Accrued expenses and other liabilities........  (1,377,000)       (347,000)
   Income taxes payable..........................      11,000      (1,810,000)
                                                   ----------      ----------
  Net cash provided by operating activities of
   continuing operations.........................   2,556,000       2,356,000
                                                   ----------       ---------

Cash flows from investing activities:
   Purchase of equipment ........................  (1,876,000)     (1,161,000)
   Purchase of software licenses.................  (2,678,000)             --
                                                   ----------       ---------
  Net cash used in investing activities of
   continuing operations.........................  (4,554,000)     (1,161,000)
                                                   ----------       ---------

Cash flows from financing activities:
  Principal payments under capital leases........    (128,000)        (3,000)
  Proceeds from exercise of stock options........          --      4,048,000
  Other borrowings...............................     (90,000)       800,000
  Net change in line of credit borrowings........   3,133,000    (10,585,000)
  Net change in note receivable-SeraNova prior to
   spin-off date.................................          --      4,484,000
  Repayment of note receivable-SeraNova subsequent
   to spin-off date, net of accrued interest of
   $222,000......................................   1,040,000             --
                                                   ----------      ---------
   Net cash provided by (used in) financing
     activities of continuing operations.........   3,955,000     (1,256,000)
                                                   ----------      ---------
   Effect of foreign currency exchange rate
     changes on cash.............................  (1,486,000)        21,000
                                                   ----------      ---------
Net cash provided by (used in) continuing
  operations ....................................     471,000       (40,000)
Net cash used in discontinued operations ........          --     (1,235,000)
                                                   ----------      ---------
Net increase (decrease) in cash and cash
  equivalents ...................................     471,000     (1,275,000)
Cash and cash equivalents at beginning of period.   1,327,000      5,510,000
                                                   ----------      ---------
Cash and cash equivalents at end of period.......  $1,798,000    $ 4,235,000
                                                   ==========    ===========
Supplemental disclosures of cash flow information:
  Cash paid for income taxes.....................  $  422,000    $ 1,509,000
                                                   ==========    ===========
  Cash paid for interest.........................  $  223,000    $    53,000
                                                   ==========    ===========
Supplemental disclosures of non-cash transactions:
  Issuance of common stock in connection with
   acquisitions..................................  $       --    $     1,000
                                                   ==========    ===========

 The accompanying notes to consolidated financial statements are an integral
                          part of these statements.


                                      -4-
<PAGE>



                       INTELLIGROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 1 - BASIS OF PRESENTATION

     The   consolidated   financial   statements  and   accompanying   financial
information  as of March 31, 2001 and for the three  months ended March 31, 2001
and  2000  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  financial  statements  included  herein  have  been  prepared  in
accordance with generally accepted accounting principles and the instructions of
Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, certain information and
footnote  disclosures  normally  included in  financial  statements  prepared in
accordance with generally accepted accounting  principles have been condensed or
omitted.  These  financial  statements  should be read in  conjunction  with the
Company's  audited  financial  statements  for the year ended December 31, 2000,
which were included as part of the Company's Form 10-K.

     On July 5, 2000, the Company  spun-off its Internet  applications  services
and management consulting businesses ("SeraNova").  This transaction resulted in
the distribution of SeraNova common stock to each holder of the Company's common
stock of  record  as of May 12,  2000.  As a  result  of this  transaction,  the
Consolidated  Financial  Statements  and  related  notes have been  restated  to
present the results of this business as discontinued operations (See Note 4).

     The Company's 2001 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 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 additional cost reductions or seeking
additional financing.  Considering the cash on hand, the anticipated  collection
of the note  receivable  from  SeraNova,  the credit  facility  and based on the
achievement  of the  operating  plan  and  management's  actions  taken to date,
management  believes it has the ability to continue to generate  sufficient cash
to satisfy its operating requirements in the normal course of business. However,
no  assurance  can  be  given  that  sufficient  cash  will  be  generated  from
operations.

     Results for interim periods are not  necessarily  indicative of results for
the entire year.


                                      -5-
<PAGE>

NOTE 2 - EARNINGS PER SHARE

     Basic earnings per share is computed by dividing income (loss) available to
common  shareholders by the weighted average number of common stock  outstanding
for the period.  Diluted earnings per share reflects the potential dilution that
could  occur  if  securities  or other  contracts  to issue  common  stock  were
exercised or converted into common stock, unless they are antidilutive.

     A reconciliation of weighted average number of common shares outstanding to
weighted average common shares outstanding assuming dilution is as follows as of
March 31:

                                                      2001          2000
                                                      ----          ----

     Weighted average number of common shares     16,630,000   16,162,000

     Common share equivalents of outstanding
     stock options                                    32,000           --
                                                   ---------    ---------
     Weighted average number of common
     shares assuming dilution                     16,662,000   16,162,000
                                                  ==========   ==========

     Stock  options,  which  would be  antidilutive  (3,116,562  as of March 31,
2001),  have been excluded from the  calculations of diluted shares  outstanding
and diluted earnings per share.

NOTE 3 - LINES OF CREDIT

     On May 31, 2000, the Company and PNC Bank,  N.A. (the "Bank")  entered into
an agreement  to replace the previous  credit  agreement  with a new  three-year
revolving credit facility. Such credit facility is comprised of a revolving line
of credit  pursuant to which the Company can borrow up to $20,000,000  either at
the  Bank's  prime rate per annum or the Euro Rate plus 1.75% to 2.5% based upon
the Company's ratio of debt to EBITDA.  The credit facility is collateralized by
substantially  all of the  assets of the United  States  based  operations.  The
maximum  borrowing  availability  under  the  line of  credit  is  based  upon a
percentage of eligible billed and unbilled accounts  receivable,  as defined. As
of March 31,  2001,  the Company  had  outstanding  borrowings  under the credit
facility of $8,146,000.  The Company  estimates undrawn  availability  under the
credit  facility to be $4,104,000 as of March 31, 2001. As of December 31, 2000,
the Company had outstanding borrowings under the credit facility of $5,013,000.


                                      -6-
<PAGE>

NOTE 3 - LINES OF CREDIT (CONTINUED)

     The credit facility provides for the following financial  covenants,  among
other things,  (1) the Company must maintain  consolidated net worth, as defined
("consolidated net worth") of (a) not less than 95% of consolidated net worth of
the immediately  preceding  fiscal year-end as at each such fiscal quarter after
December 31,  2000;  and (b) at least 105% of  consolidated  net worth as of the
immediately preceding fiscal year-end as at each such fiscal year-end subsequent
to December 31, 2000;  provided,  however,  the foregoing  covenant shall not be
tested for any quarter so long as the  Company  maintains,  at all times  during
such fiscal  quarter,  undrawn  availability of more than $5,000,000 and (2) the
Company must maintain unconsolidated net worth, as defined  ("unconsolidated net
worth") of (a) not less than 95% of unconsolidated  net worth of the immediately
preceding  fiscal  year-end as at each such fiscal  quarter  after  December 31,
2000; and (b) at least 105% of  unconsolidated  net worth as of the  immediately
preceding fiscal year-end as at each such fiscal year-end subsequent to December
31, 2000; provided,  however, the foregoing covenant shall not be tested for any
quarter  so long as the  Company  maintains,  at all times  during  such  fiscal
quarter, undrawn availability of more than $5,000,000.  Additionally, the credit
facility  contains material adverse change clauses with regards to the financial
condition of the assets,  liabilities and operations of the Company. As of March
31, 2001, the Company was in compliance with all financial covenants.

     Interest expense on debt and obligations under capital leases  approximated
$223,000  and  $53,000  for the three  months  ended  March  31,  2001 and 2000,
respectively.

NOTE 4 - DISCONTINUED OPERATIONS

     In November  1999,  the Company  announced  its  intentions to spin off its
Internet  applications  services and management  consulting  business subject to
certain  approvals and conditions.  On January 1, 2000, the Company  transferred
its Internet  applications  services and  management  consulting  businesses  to
SeraNova, a wholly-owned subsidiary of the Company on such date.

     On July 5, 2000, the Company completed the tax-free spin-off of SeraNova by
distributing all of the outstanding  shares of the common stock of SeraNova then
held by the Company to holders of record of the Company's common stock as of the
close  of  business  on May 12,  2000 (or to their  subsequent  transferees)  in
accordance  with the terms of a  Distribution  Agreement  dated as of January 1,
2000  between the Company  and  SeraNova.  SeraNova  represented  a  significant
segment of the Company's business.


                                      -7-
<PAGE>


NOTE 4 - DISCONTINUED OPERATIONS (CONTINUED)

     Pursuant to APB  Opinion No. 30,  "Reporting  the Results of  Operations  -
Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary,
Unusual and Infrequently  Occurring Events and  Transactions,"  the Consolidated
Financial  Statements  of the  Company  have been  reclassified  to reflect  the
spin-off  of  SeraNova.   Accordingly,  the  assets,  liabilities,   results  of
operations,  and cash flows of SeraNova have been segregated in the Consolidated
Balance  Sheets,   Consolidated   Statements  of  Operations  and   Consolidated
Statements  of Cash Flows.  The net operating  results,  net assets and net cash
flows  of  SeraNova  have  been  reported  as  "Discontinued   Operations."  The
historical  carrying  amount of the net assets of SeraNova on the spin-off  date
has been recorded as a stock dividend.

     The  following is summarized  financial  information  for the  discontinued
operations of SeraNova:

                                         JANUARY 1, 2000    JANUARY 1,
                                                TO         2000 TO MARCH
                                           JULY 5, 2000      31, 2000
                                         ---------------   -------------

      Revenue..........................   $ 36,019,000      $16,176,000
      Pre-tax loss.....................     (6,986,000)      (4,189,000)
      Income tax benefit...............     (2,095,000)      (1,110,000)
      Loss from discontinued operations     (4,891,000)      (3,079,000)

                                           JULY 5, 2000
                                         ---------------
      Current assets...................   $ 25,319,000
      Total assets.....................     36,874,000
      Note payable to Intelligroup.....     15,059,000
      Current liabilities..............      9,173,000
      Total liabilities................     26,170,000
      Net assets of discontinued
      operations.......................     10,704,000


NOTE 5 - NOTE RECEIVABLE - SERANOVA

     On May  31,  2000,  SeraNova  and  the  Company  formalized  a  $15,100,000
unsecured  promissory  note (the "Note")  relating to net borrowings by SeraNova
from the Company  through such date.  The Note bears  interest at the prime rate
plus 1/2%.  The Company has recorded  total accrued  interest of $1,025,000  and
$803,000 as of March 31, 2001 and December 31, 2000, respectively.  A payment of
$3,000,000 was made on September 29, 2000 with the balance being due on July 31,
2001. The Note has certain mandatory prepayment  provisions based on future debt
or equity financings by SeraNova.

     In September  2000,  SeraNova  consummated  an $8,000,000  preferred  stock
financing  with  two  institutional   investors.   According  to  the  mandatory
prepayment provisions of the Note, SeraNova was required to make a prepayment of
$3,000,000  on the Note as a result of the stock  financing.  Subsequently,  the
Company finalized, with SeraNova, the terms of an agreement to waive, subject to
certain conditions, certain of the mandatory prepayment obligations arising as a
result of the financing.  The terms of the new agreement  included,  among other
things, that


                                      -8-
<PAGE>


NOTE 5 - NOTE RECEIVABLE - SERANOVA (CONTINUED)

SeraNova pay the Company (i) $500,000  upon  execution  of the  agreement;  (ii)
$500,000 on or before each of January 31, 2001,  February  28,  2001,  March 31,
2001,  April 30, 2001 and May 31, 2001; and (iii) $400,000 on or before December
15, 2000 to be applied either as (a) an advance  payment  towards a contemplated
services  arrangement for hosting services to be provided to SeraNova by Company
(the "Hosting Agreement"); or (b) in the event that no such Hosting Agreement is
executed on or before December 15, 2000, an additional advance prepayment toward
the principal of the Note.

     The Company  received from SeraNova the $500,000  payment that was due upon
execution of the agreement and a $400,000 payment in December 2000 as an advance
payment  towards  the  principal  of the Note  since no  Hosting  Agreement  was
executed before December 15, 2000. During the first quarter of 2001, the Company
received payments totaling $900,000 from SeraNova and issued $362,000 of credits
as an adjustment to the note balance,  contingent upon the timely  resolution of
all past due  appears as of March 31,  2001.  However,  the  Company has not yet
received the entire  remaining  balance due as of March 31, 2001.  Additionally,
SeraNova  has not paid the $500,000  payment  that was due April 30,  2001.  The
Company is actively  pursing  collection  of these  amounts with  SeraNova  (and
Silverline Technologies Limited, which acquired SeraNova in March 2001).

NOTE 6 - RESTRUCTURING AND OTHER SPECIAL CHARGES

     In connection with the Company's plan to reduce costs and improve operating
efficiencies,  the Company incurred a non-recurring charge of $5,628,000 related
to  restructuring  initiatives  during the year ended  December  31,  1999.  The
restructuring charge included settlement of the former chief executive officer's
employment agreement and additional severance payment,  expenses associated with
the  termination of certain  employees in the United States and United  Kingdom,
the closing of certain  satellite offices in the United States and an additional
office in Belgium, and costs to exit certain contractual obligations.

     Activity in accrued costs for restructuring and other special charges is as
follows:

<TABLE>
<CAPTION>

                                  CHARGES       COSTS      ACCRUED     COST     ACCRUED    COST    ACCRUED
                                    TO          PAID        COSTS      PAID      COSTS     PAID     COSTS
                                OPERATIONS     DURING     DECEMBER    DURING   DECEMBER   DURING   MARCH 31,
                                  IN 1999       1999      31, 1999     2000    31, 2000    2001      2001
                                ----------     ------     --------    ------   --------   ------   ---------
<S>                             <C>          <C>          <C>        <C>        <C>       <C>      <C>
Severance and related costs.... $5,027,000   $4,162,000   $865,000   $608,000   $257,000  $91,000  $166,000
Other costs primarily to exit
  facilities, contracts, and
  certain activities...........    601,000      517,000     84,000         --     84,000       --    84,000
                                  --------    ---------    -------    -------    -------   ------   -------
                                $5,628,000   $4,679,000   $949,000   $608,000   $341,000  $91,000  $250,000
                                ==========   ==========   ========   ========   ========  =======  ========
</TABLE>


                                      -9-
<PAGE>

NOTE 7 - SEGMENT DATA AND GEOGRAPHIC INFORMATION

     The  Company  operates  in one  industry  segment,  information  technology
solutions and services.  Prior to the spin-off of SeraNova, the Company had been
reporting two business segments as follows:

     o  ENTERPRISE APPLICATIONS SERVICES GROUP  - the  largest  business segment
        of   the  Company's   operations,   which  provides  a  wide   range  of
        information   technology   solutions  and   services,   including    the
        development,  integration,  implementation,  hosting   and   application
        management and  support  of e-commerce and  enterprise  applications  to
        companies of all sizes.

     o  INTERNET  APPLICATIONS  SERVICES  GROUP  -  the  Internet   professional
        services  to  businesses  segment  of  the  Company's  operations, which
        provides  information  technology  services  that  enable  customers  to
        communicate  and  conduct  commerce between its customers, suppliers and
        partners over the Internet.

     The  Internet   Applications   Services  group   represented   the  assets,
liabilities  and results of operations  of SeraNova,  which has been reported as
discontinued  operations for all periods presented.  Accordingly,  the Company's
Enterprise  Applications  Services group is presented as one business segment in
the  following  geographic  areas for the three  months ended March 31, 2001 and
2000.

<TABLE>
<CAPTION>

                         UNITED
                         STATES   ASIA-PACIFIC    EUROPE       INDIA       TOTAL
                         ------   ------------    ------       -----       -----
<S>                   <C>          <C>          <C>          <C>          <C>
THREE MONTHS ENDED
------------------
MARCH 31, 2001
--------------
Revenue.............. $19,522,000  $3,445,000   $3,865,000   $3,205,000   $30,037,000

Depreciation &            538,000      84,000      183,000      140,000       945,000 (1)
amortization.........

Operating income          (10,000)   (269,000)    (733,000)   1,114,000       102,000
(loss)...............

Total assets.........  45,779,000   7,678,000    8,647,000    4,554,000    66,658,000


THREE MONTHS ENDED
------------------
MARCH 31, 2000
--------------
Revenue.............. $21,006,000  $2,120,000   $4,812,000   $1,113,000   $29,051,000

Depreciation &            571,000      28,000      174,000       74,000       847,000
amortization.........

Operating income       (2,453,000)   (286,000)    (425,000)      94,000    (3,070,000)
(loss)...............

Total assets.........  47,416,000   3,496,000    5,774,000    4,951,000    61,637,000 (2)
</TABLE>


-------------------------
(1)     Excludes $108,000  of depreciation and  amortization included in cost of
        sales for the three months ended March 31, 2001.
(2)     Excludes  $12,384,000 of net  assets  of discontinued operations  as  of
        March 31, 2000.

     Included above are hosting and application  management and support revenues
of $5,103,000 and $4,869,000 for the three months ended March 31, 2001 and 2000,
respectively.   Other  information   related  to  the  hosting  and  application
management and support business is not available and the Company determined that
it would be impractical to calculate such data.

                                      -10-
<PAGE>

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

OVERVIEW

     The Company provides a wide range of information  technology  solutions and
services  including the development,  integration,  implementation,  hosting and
application management and support of e-commerce and enterprise  applications to
companies of all sizes. The Company's  industry-specific knowledge and expertise
in a wide range of technologies,  coupled with its ability to provide timely and
cost-effective  integrated  technology  solutions,  are  intended to provide its
customers with  substantial  improvements  in the efficiency and  performance of
their  businesses.  The  Company's  mission  is to  develop,  deploy,  and  host
customized,  scalable  technology  solutions that integrate  seamlessly into its
customers'  existing   environment,   maximize  the  return  on  its  customers'
technology investment,  and provide a faster time-to-market and lower total cost
of ownership.

     Since the Company's  inception in 1987, it has built its  reputation on the
design, development,  implementation and support of complex technology solutions
based  primarily  on SAP,  Oracle and  PeopleSoft  products.  In late 1999,  the
Company  made the  strategic  decision to leverage its  traditional  application
implementation and consulting experience and reposition  Intelligroup for future
growth by focusing on the emerging  Application Service Provider ("ASP") market.
At the same time,  the Company  made the  strategic  decision  to  spin-off  its
Internet services business to the shareholders of the Company.  Accordingly,  on
January 1, 2000, the Company transferred its Internet  applications services and
management consulting businesses to SeraNova, Inc. ("SeraNova"),  a wholly-owned
subsidiary of the Company on such date.

     On January 27,  2000,  SeraNova  filed a  Registration  Statement  with the
Securities and Exchange Commission (the "SEC") relating to the proposed spin-off
of SeraNova  from the  Company.  On June 29, 2000,  the SEC declared  SeraNova's
Registration  Statement effective.  On July 5, 2000, the Company distributed all
of the  outstanding  shares of the  common  stock of  SeraNova  then held by the
Company to holders of record of the  Company's  common  stock as of the close of
business on May 12, 2000 (or to their subsequent transferees) in accordance with
the terms of a  Distribution  Agreement  dated as of January 1, 2000 between the
Company  and  SeraNova.  Accordingly,  the  assets,  liabilities  and results of
operations  of SeraNova have been reported as  discontinued  operations  for all
periods presented. (See "Discontinued Operations").

     As  a  global  ASP  of  customized,   scalable  enterprise  and  e-commerce
solutions,  the Company has focused its development and marketing efforts on the
vertical  industries  in which it has built  expertise and which it believes are
ready for adoption of the ASP model. These specific industries include:  process
and discrete  manufacturing,  professional services, and the public sector. As a
full-service,  single-source  ASP,  Intelligroup's  ASPPlus(SM)  Hosting service
bundles  the  key  ASP  components  and  core  competencies,  combining  leading
e-commerce and enterprise software and a global technology infrastructure,  with
the Company's application  implementation,  management and support resources and
capabilities.  Utilizing  the ASP  model,  the  Company's  "software-to-service"
solutions are  contracted on a predictable  subscription  basis and delivered to
its  customers   over  a  secure  global   network.   As  the  single  point  of
accountability to the customer,

                                      -11-
<PAGE>

the Company  supports and manages  every  component of the ASP - from servers to
software, data centers to data storage. By taking responsibility for the Service
Level Agreements  associated with the ASP model, the Company can help assure the
on-going reliability,  security, performance,  service and long-term support for
the customer.

     The Company's  ASPPlus Hosting service  provides  customers with e-commerce
and enterprise  software  selected by Intelligroup to closely match the business
needs of specific market  segments,  such as  pharmaceutical  manufacturers,  IT
professional services organizations, high tech and educational institutions. Its
strategic alliances with such software leaders as SAP, PeopleSoft, Oracle, Niku,
MicroStrategy,  Onyx, Vignette,  Crossworlds and Ariba give its customers access
to the latest  developments in technology-based  business  solutions,  including
enterprise  resources  planning,  customer  relationship  management,   business
intelligence,  content management,  and supply chain management.  To provide the
global  infrastructure  on  which  to  deliver  and  support  solutions  for its
customers  worldwide,  Intelligroup  became a founding Platinum member of AT&T's
Ecosystem for ASPs. As its strategic partner and infrastructure  provider,  AT&T
provides  the  data  center,  hardware  and  operating  systems,  and  requisite
bandwidth and communications capabilities. These strategic alliances and hosting
partnerships not only support the ASP model,  they present strong  cross-selling
opportunities and multiple points of entry into a customer's enterprise.

     By customizing,  configuring and integrating  core business systems such as
human    resources    and    financials    with     business-to-business     and
business-to-customer  applications,  the Company  creates for its  customers  an
end-to-end  technology  value  chain that  delivers  e-commerce  and  enterprise
solutions across the entire enterprise.

     Key to the Company's strategy is the Advanced Development Center ("ADC") in
Hyderabad,  India,  which  provides 24 x 365  development  and support using the
technical  expertise of its  developers  and technical  staff.  In May 2000, the
center was awarded  Level 2 of the People  Capability  Maturity  Model(R) by the
Carnegie  Mellon Software  Engineering  Institute  ("CMM-SEI").  The achievement
recognizes Intelligroup for its ability to attract, develop, motivate,  organize
and retain the talent needed to  continuously  improve its software  development
capability.  Intelligroup  is among the first in the IT  industry  to  integrate
CMM-SEI workforce  improvement with software process  improvement,  for which it
has achieved Software CMM-SEI Level 5 certification  for continuous  improvement
of its software  engineering.  In addition,  the ADC is ISO  9001-certified  for
software development, support and optimization.

     Intelligroup's  ASPPlus Application Management services deliver and support
outsourced enterprise  application and e-commerce software.  ASPPlus Application
Management  services  provide full life cycle support of enterprise  application
and e-commerce applications through offshore facilities and resources.

     The  majority  of  the  Company's  revenues  continue  to be  derived  from
professional  consulting  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

                                      -12-
<PAGE>

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  information  technology  consulting  firm.
Where contractual provisions permit, customers also are billed for reimbursement
of expenses incurred by the Company on the customers' behalf.

     The Company has provided  services on certain  projects in which it, at the
request of the  clients,  offered a fixed price for its  services.  For the year
ended  December  31, 2000,  revenues  derived  from  projects  under fixed price
contracts  represented  approximately 10% of the Company's total revenue.  Fixed
price  contracts,  in the  aggregate,  represented  14% of the  Company's  total
revenue  during the three  months  ended March 31,  2001.  No single fixed price
project was material to the Company's  business  during 2000 or during the three
months  ended March 31,  2001.  The  Company  believes  that,  as it pursues its
strategy of providing hosting and application management and support 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.

     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 each of the three  months ended March 31, 2001 and the year ended
December 31, 2000,  the  Company's  ten largest  customers  accounted for in the
aggregate  approximately  34% of revenue.  For the three  months ended March 31,
2001, no single customer  accounted for more than 10% of revenues.  For the year
ended  December 31, 2000,  one customer  accounted for more than 10% of revenue.
For the three months ended March 31, 2001 and the year ended  December 31, 2000,
39% and 36%, respectively,  of the Company's revenue was generated by serving as
a  member  of  consulting  teams  assembled  by  other  information   technology
consulting  firms.  There can be no assurance that such  information  technology
consulting  firms will  continue  to engage the Company in the future at current
levels of retention, if at all.

     During the three  months  ended March 31, 2001 and the year ended  December
31,  2000,  approximately  69% and 63%,  respectively,  of the  Company's  total
revenue was derived from  projects in which the Company  implemented,  extended,
hosted or maintained software developed by SAP. For the three months ended March
31,  2001 and the year  ended  December  31,  2000,  approximately  16% and 24%,
respectively,  of the Company's total revenue was derived from projects in which
the Company  implemented,  extended,  hosted or maintained software developed by
PeopleSoft. For each of the three months ended March 31, 2001 and the year ended
December 31, 2000,  approximately  9% of the Company's total revenue was derived
from projects in which the Company implemented,  extended,  hosted or maintained
software developed by Oracle.

     The Company's most significant cost is project  personnel  expenses,  which
consist of consultant salaries, benefits and payroll-related expenses. Thus, the
Company's financial performance is based primarily upon billing margin (billable
hourly rate less the cost to the

                                      -13-
<PAGE>

Company of a consultant  on an hourly  basis) and  personnel  utilization  rates
(billable hours divided by paid hours).

     The Company  currently  maintains its  headquarters in Edison (New Jersey),
with  branch  offices in Atlanta  (Georgia),  Rosemont  (Illinois),  Foster City
(California) and Trujillo Alto,  Puerto Rico. The Company also maintains offices
in  Europe  (Denmark,   the  United  Kingdom,  and  Sweden),  and  Asia  Pacific
(Australia,  India,  Japan,  New Zealand,  Singapore and Hong Kong). The Company
leases its headquarters in Edison, New Jersey. Such lease has an initial term of
ten (10) years, which commenced in September 1998.

DISCONTINUED OPERATIONS

     On July 5, 2000, the Company completed the tax-free spin-off of SeraNova by
distributing all of the outstanding  shares of the common stock of SeraNova then
held by the Company to holders of record of the Company's common stock as of the
close of business on May 12, 2000 (or to their subsequent transferees).

     SeraNova  represented  a  significant  segment of the  Company's  business.
Pursuant to Accounting  Principles Board ("APB") Opinion No. 30,  "Reporting the
Results of  Operations  -  Reporting  the  Effects of Disposal of a Segment of a
Business,  and  Extraordinary,  Unusual and  Infrequently  Occurring  Events and
Transactions,"  the Consolidated  Financial  Statements of the Company have been
reclassified  to reflect the  spin-off  of  SeraNova.  Accordingly,  the assets,
liabilities,  results  of  operations,  and cash  flows of  SeraNova  have  been
segregated  in the  Consolidated  Balance  Sheets,  Consolidated  Statements  of
Operations and Consolidated Statements of Cash Flows. The net operating results,
net assets and net cash flows of SeraNova  have been  reported as  "Discontinued
Operations." The historical carrying amount of the net assets of SeraNova on the
spin-off date has been  recorded as a dividend.

     The Company has reported a $3.1 million loss from  discontinued  operations
for the three months ended March 31, 2000.

FORWARD-LOOKING STATEMENTS

     This Form 10-Q contains  forward-looking  statements  within the meaning of
Section 21E of the  Securities  Exchange  Act of 1934,  as  amended,  including,
without  limitation,  statements  regarding the Company's intention to shift its
focus  to  comprehensive  ASPPlus  solutions.  Such  forward-looking  statements
include risks and uncertainties, including, but not limited to:

     o  the  continued uncertainty  of the  Application Service Provider ("ASP")
        market   and  revenues  derived   from  anticipated   ASP  hosting   and
        application management and support business;

     o  the  substantial   variability  of  the  Company's  quarterly  operating
        results  caused by  a variety  of factors,  many of which are not within
        the   Company's  control,  including   (a)  patterns   of  software  and
        hardware  capital  spending  by  customers,  (b) information  technology
        hosting  and  outsourcing  trends,  (c)  the timing,  size and  stage of
        projects,  (d)  timing  and  impact  of  acquisitions,  (e) new  service
        introductions  by  the  Company

                                      -14-
<PAGE>

        or  its  competitors  and the timing of  new  product  introductions  by
        the Company's   enterprise  application  and  e-commerce  partners,  (f)
        levels of  market  acceptance   for the Company's services,  (g) general
        economic  conditions,  (h) the  hiring of additional staff and (i) fixed
        price contracts;

     o  changes in the Company's billing and employee utilization rates;

     o  the  Company's  ability  to manage its  growth  effectively,  which will
        require  the Company  to (a)  continue  developing   and  improving  its
        operational,  financial  and  other  internal  systems,  as  well as its
        business  development  capabilities,   (b)   attract,   train,   retain,
        motivate  and  manage  its   employees,  (c)  continue to maintain  high
        rates  of  employee  utilization  at   profitable  billing   rates,  (d)
        successfully  integrate  the  personnel and  businesses  acquired by the
        Company,  and  (e) maintain  project  quality,  particularly if the size
        and scope of the Company's projects increase;

     o  the  Company's  ability  to  maintain  an  effective   internal  control
        structure;

     o  the  Company's   limited  operating  history  within  the  ASP  line  of
        business;

     o  the  Company's reliance on a continued relationship with SAP America and
        the  Company's present  status as a mySAP.com  Partner - Services or SAP
        Services Partner;

     o  the Company's substantial reliance on key customers and large projects;

     o  the  highly   competitive  nature  of  the  markets  for  the  Company's
        services;

     o  the Company's ability to successfully  address the continuing changes in
        information  technology,  evolving  industry  standards   and   changing
        customer objectives and preferences;

     o  the  Company's reliance on the  continued  services of its key executive
        officers and leading technical personnel;

     o  the  Company's  ability to attract  and  retain a  sufficient  number of
        highly skilled employees in the future;

     o  uncertainties  resulting from pending litigation matters, from potential
        administrative  and regulatory immigration  and tax law matters and from
        the  outstanding  liability  of  SeraNova  to  the  Company  under   the
        promissory note dated May 31, 2000, as amended;

     o  the Company's ability to protect its intellectual property rights; and

     o  in  addition,  in  March  2001,  SeraNova  and  Silverline  Technologies
        Limited  ("Silverline")  consummated  the   acquisition of  SeraNova  by
        Silverline.   SeraNova's   management   has   represented   that    such
        acquisition  was  not  contemplated   at  the  time of

                                      -15-
<PAGE>

        the  spin-off of SeraNova  by the Company,  and  accordingly  should not
        impact the  tax-free  nature  of the  spin-off.  Should the  spin-off be
        ultimately  construed to  be taxable,  there is a  risk that if SeraNova
        and/or  Silverline  are unable  or unwilling to  pay the  resultant  tax
        liability  pursuant to SeraNova's indemnification  obligations under its
        Tax Sharing  Agreement  with  the Company,  the Company  would bear  the
        liability to pay such resultant tax liability.

     As a result of these factors and others,  the Company's  actual results may
differ materially from the results disclosed in such forward-looking statements.

RESULTS OF OPERATIONS

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

                                                  PERCENTAGE OF REVENUE
                                          --------------------------------------
                                              THREE MONTHS ENDED MARCH 31,
                                          --------------------------------------
                                                  2001              2000
                                                  ----              ----

Revenue................................           100.0%            100.0%
Cost of sales..........................            69.5              66.0
                                          -------------------  -----------------
   Gross profit........................            30.5              34.0
Selling, general and administrative                27.0              41.6
   expenses............................
Depreciation and amortization expense..             3.2               3.0
                                          -------------------  -----------------
   Total operating expenses............            30.2              44.6
                                          -------------------  -----------------
   Operating income (loss).............             0.3             (10.6)
Other income (expense), net............             0.4              (0.1)
                                          -------------------  -----------------
Income (loss) from continuing
   operations before income taxes......             0.7             (10.7)
Provision (benefit) for income taxes...             0.1              (3.4)
                                          -------------------  -----------------
Net income (loss) from continuing
   operations..........................             0.6%             (7.3)%
                                          ===================  =================


THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO THREE MONTHS ENDED MARCH 31,
2000

     The following discussion compares the three months ended March 31, 2001 and
the three months ended March 31, 2000, for continuing operations.

     REVENUE.  Total  revenue  increased by 3.4%,  or $0.9  million,  from $29.1
million  during the three months ended March 31, 2000, to $30.0  million  during
the three  months ended March 31,  2001.  The increase in revenue was  primarily
attributable to continued demand for traditional  consulting  service offerings,
including  enterprise  and e-commerce  implementations  and  extensions,  and an
increased  demand for  application  management  and support  services,  offshore
development services and our proprietary SAP upgrade toolset, Uptimizer.

     GROSS  PROFIT.  Cost of sales  primarily  includes  the cost of salaries to
consultants  and related  employee  benefits  and payroll  taxes.  Cost of sales
increased by 8.8%, or $1.7 million,  from $19.2 million  during the three months
ended March 31, 2000 to $20.9  million  during the three  months ended March 31,
2001.  The increase in cost of sales was  primarily  due to  additional

                                      -16-
<PAGE>

salary, payroll taxes, benefits,  travel and training costs for consultants,  as
billable  headcount  increased during the three months ended March 31, 2001. The
increase in billable  headcount resulted from efforts to adapt and capitalize on
changes in the global  marketplace.  Gross  profit  decreased  by 7.1%,  or $0.7
million,  from $9.9 million during the three months ended March 31, 2000 to $9.2
million  during the three  months  ended March 31,  2001.  Gross  profit  margin
decreased  from 34.0% of revenue during the three months ended March 31, 2000 to
30.5% of revenue  during the three months ended March 31, 2001.  The decrease in
gross  margins  reflects a  combination  of  competitive  pressure on consultant
billing rates in the current  market,  and growth in the  long-term  application
management and support business.

     SELLING,  GENERAL  AND  ADMINISTRATIVE   EXPENSES.   Selling,  general  and
administrative  expenses  consist  primarily  of  administrative  salaries,  and
related benefits costs,  occupancy costs, sales person compensation,  travel and
entertainment,  costs  associated  with  the  Advanced  Development  Center  and
professional fees.  Selling,  general and  administrative  expenses decreased by
32.9%,  or $4.0 million,  from $12.1 million during the three months ended March
31, 2000 to $8.1  million  during the three  months  ended March 31,  2001,  and
decreased as a  percentage  of revenue  from 41.6% to 27.0%,  respectively.  The
decrease in such expenses,  in absolute  dollars and as a percentage of revenue,
was primarily related to the significant investments in marketing and developing
the hosting and application management business during the first three months of
2000.  Subsequently,  the  Company  has  been  focused  on  improving  operating
efficiencies   and  controlling   discretionary   expenditures   throughout  the
organization to maintain an alignment with current and projected revenues.

     DEPRECIATION  AND  AMORTIZATION.  Depreciation  and  amortization  expenses
increased  11.6% to $0.9 million  (excluding  $0.1 million of  depreciation  and
amortization  included in cost of sales) during the three months ended March 31,
2001, compared to $0.8 million during the three months ended March 31, 2000. The
increase was primarily due to  depreciation on additional  computers,  equipment
and software placed in service since March 31, 2000.

     INTEREST INCOME  (EXPENSE).  The Company earned $344,000 in interest income
during the three months ended March 31, 2001,  compared with $24,000  during the
three  months ended March 31, 2000.  The increase was  primarily  related to the
interest earned on the balance of the note receivable with SeraNova. The Company
incurred  $223,000 and $53,000 in interest expense during the three months ended
March 31, 2001 and 2000, respectively, primarily related to borrowings under its
line of credit.  Borrowings under the line of credit were used to fund operating
activities.

     (BENEFIT)  PROVISION FOR INCOME TAXES. The Company's effective tax rate was
15.7%  and  (32.0)%  for the  three  months  ended  March  31,  2001  and  2000,
respectively.  Based on anticipated profitability in the near future, management
believes  it is more likely than not,  that the net  deferred  tax asset of $1.3
million will be realized.

     In  1996,  the  Company  elected  a five  year tax  holiday  in  India,  in
accordance with a local tax incentive  program whereby no income tax will be due
in such period.  Such tax holiday was extended an additional five years in 1999.
Effective  April 1, 2000 pursuant to changes  introduced  by the Indian  Finance
Act, 2000,  the tax holiday  previously  granted is no longer

                                      -17-
<PAGE>

available and has been replaced in the form of a tax  deduction  incentive.  The
impact  of this  change  is not  expected  to be  material  to the  consolidated
financial  statements of the Company.  For the three months ended March 31, 2001
and 2000, the tax holiday and new tax deduction favorably impacted the Company's
effective tax rate.

LIQUIDITY AND CAPITAL RESOURCES

     The Company had cash and cash equivalents of $1.8 million at March 31, 2001
and $1.3 million at December 31, 2000. The Company had working  capital of $18.5
million at March 31, 2001 and $23.6 million at December 31, 2000.

     Cash provided by continuing  operating  activities  was $2.6 million during
the three  months  ended March 31, 2001,  primarily  resulting  from income from
continuing operations,  decreases in unbilled services and other current assets,
and an increase in accounts  payable.  These amounts were partially  offset by a
decrease in accrued  payroll and related  taxes and accrued  expenses  and other
liabilities.  Cash provided by continuing  operating activities during the three
months ended March 31, 2000 was $2.4 million.

     The Company  invested  $1.9 million and $1.2 million in computer  equipment
and office  furniture and fixtures  during the three months ended March 31, 2001
and  2000,  respectively.  The  increase  reflects  purchases  of  computer  and
telecommunications  equipment and office  furniture and fixtures for consultants
and  administrative  staff.  Additionally,  the Company invested $2.7 million in
purchased  software  during the three months ended March 31, 2001. The purchased
software is an integral  component of the overall ASPPlus  solution  provided to
customers.

     On May 31, 2000, the Company and PNC Bank,  N.A. (the "Bank")  entered into
an agreement  to replace the previous  credit  agreement  with a new  three-year
revolving credit facility. Such credit facility is comprised of a revolving line
of credit pursuant to which the Company can borrow up to $20.0 million either at
the  Bank's  prime rate per annum or the Euro Rate plus 1.75% to 2.5% based upon
the Company's ratio of debt to EBITDA.  The credit facility is collateralized by
substantially  all of the  assets of the United  States  based  operations.  The
maximum  borrowing  availability  under  the  line of  credit  is  based  upon a
percentage of eligible billed and unbilled accounts  receivable,  as defined. As
of March 31,  2001,  the Company  had  outstanding  borrowings  under the credit
facility of $8.1 million.  The Company estimates undrawn  availability under the
credit  facility to be $4.1  million as of March 31,  2001.  As of December  31,
2000, the Company had outstanding  borrowings under the prior credit facility of
$5.0 million.

     The credit facility provides for the following financial  covenants,  among
other things,  (1) the Company must maintain  consolidated net worth, as defined
("consolidated net worth") of (a) not less than 95% of consolidated net worth of
the immediately  preceding  fiscal year-end as at each such fiscal quarter after
December 31,  2000;  and (b) at least 105% of  consolidated  net worth as of the
immediately preceding fiscal year-end as at each such fiscal year-end subsequent
to December 31, 2000;  provided,  however,  the foregoing  covenant shall not be
tested for any quarter so long as the  Company  maintains,  at all times  during
such fiscal quarter,  undrawn availability of more than $5.0 million and (2) the
Company must maintain unconsolidated net

                                      -18-
<PAGE>

worth,  as  defined  ("unconsolidated  net  worth")  of (a) not less than 95% of
unconsolidated net worth of the immediately preceding fiscal year-end as at each
such  fiscal  quarter  after  December  31,  2000;  and  (b) at  least  105%  of
unconsolidated  net worth as of the immediately  preceding fiscal year-end as at
each such fiscal year-end  subsequent to December 31, 2000;  provided,  however,
the  foregoing  covenant  shall not be  tested  for any  quarter  so long as the
Company maintains, at all times during such fiscal quarter, undrawn availability
of more than $5.0 million.  Additionally,  the credit facility contains material
adverse  change  clauses with regard to the  financial  condition of the assets,
liabilities and operations of the Company. As of March 31, 2001, the Company was
in compliance with all financial covenants.

     On May 31,  2000,  SeraNova  and the  Company  formalized  a $15.1  million
unsecured  promissory  note (the "Note")  relating to net borrowings by SeraNova
from the Company  through such date.  The Note bears  interest at the prime rate
plus 1/2%. The Company has recorded  total accrued  interest of $1.0 million and
$0.8 million as of March 31, 2001 and December 31, 2000, respectively. A payment
of $3.0  million was made on  September  29, 2000 with the balance  being due on
July 31, 2001. The Note has certain  mandatory  prepayment  provisions  based on
future debt or equity financings by SeraNova.

     In September  2000,  SeraNova  consummated an $8.0 million  preferred stock
financing  with  two  institutional   investors.   According  to  the  mandatory
prepayment provisions of the Note, SeraNova was required to make a prepayment of
$3.0 million on the Note as a result of the stock financing.  Subsequently,  the
Company finalized, with SeraNova, the terms of an agreement to waive, subject to
certain conditions, certain of the mandatory prepayment obligations arising as a
result of the financing.  The terms of the new agreement  included,  among other
things,  that  SeraNova pay the Company (i) $0.5  million upon  execution of the
agreement; (ii) $0.5 million on or before each of January 31, 2001, February 28,
2001, March 31, 2001, April 30, 2001 and May 31, 2001; and (iii) $0.4 million on
or before  December  15,  2000 to be applied  either as (a) an  advance  payment
towards a contemplated  services arrangement for hosting services to be provided
to SeraNova by the Company (the "Hosting  Agreement");  or (b) in the event that
no such  Hosting  Agreement  is  executed on or before  December  15,  2000,  an
additional advance prepayment toward the principal of the Note.

     The Company  received from  SeraNova the $0.5 million  payment that was due
upon  execution of the agreement and a $0.4 million  payment in December 2000 as
an advance payment towards the principal of the Note since no Hosting  Agreement
was executed  before  December 15, 2000.  During the first quarter of 2001,  the
Company  received  payments  totaling $0.9 million from SeraNova and issued $0.4
million of credits as an  adjustment to the note  balance,  contingent  upon the
timely  resolution  of all past due arrears as of March 31, 2001.  However,  the
Company has not yet  received the entire  remaining  balance due as of March 31,
2001. Additionally,  SeraNova has not paid the $0.5 million payment that was due
April 30, 2001.  The Company is actively  pursuing  collection  of these amounts
with SeraNova (and Silverline  Technologies Limited,  which acquired SeraNova in
March 2001).

     The Company's 2001 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

                                      -19-
<PAGE>

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 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 additional cost reductions or seeking additional financing.  Considering
the  cash on hand,  the  anticipated  collection  of the  note  receivable  from
SeraNova, the credit facility and based on the achievement of the operating plan
and management's  actions taken to date,  management believes it has the ability
to continue to generate sufficient cash to satisfy its operating requirements in
the  normal  course  of  business.  However,  no  assurance  can be  given  that
sufficient cash will be generated from operations.

     The Company believes that its available funds, combined with current credit
arrangements,  the  anticipated  collection of the note receivable from SeraNova
and the cash flow expected to be generated from operations,  will be adequate to
satisfy its current and planned operations for at least the next 12 months.

EUROPEAN MONETARY UNION (EMU)

     The euro was  introduced  on  January  1,  1999,  at which  time the eleven
participating  EMU member countries  established  fixed conversion rates between
their  existing   currencies  (legacy  currencies)  and  the  euro.  The  legacy
currencies  will  continue to be used as legal tender  through  January 1, 2002;
thereafter, the legacy currencies will be canceled and euro bills and coins will
be used for cash  transactions  in the  participating  countries.  The Company's
European  sales and  operations  offices  affected by the euro  conversion  have
established  plans to address the  systems  issues  raised by the euro  currency
conversion  and  are  cognizant  of  the  potential  business   implications  of
converting to a common currency. The Company is unable to determine the ultimate
financial  impact of the  conversion on its  operations,  if any, given that the
impact  will be  dependent  upon the  competitive  situations  that exist in the
various  regional  markets in which the Company  participates  and the potential
actions that may or may not be taken by the Company's competitors and suppliers.

ITEM 3    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

     Although the Company cannot accurately determine the precise effect thereof
on its  operations,  it does not believe  inflation,  currency  fluctuations  or
interest rate changes have  historically  had a material effect on its revenues,
sales or results of operations.  Any significant effects of inflation,  currency
fluctuations  and  changes  in  interest  rates on the  economies  of the United
States, Asia and Europe could adversely impact the Company's revenues, sales and
results of operations in the future.  If there is a material  adverse  change in
the  relationship  between European  currencies  and/or Asian currencies and the
United  States  Dollar,  such change would  adversely  affect the results of the
Company's  European  and/or  Asian  operations  as  reflected  in the  Company's
financial  statements.  The Company has not hedged its exposure  with respect to
this currency  risk,  and does not expect to do so in the future,  since it does
not believe that it is practicable for it to do so at a reasonable cost.


                                      -20-
<PAGE>

PART II     OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

     On February 7, 2001, NSA Investments II LLC filed a complaint in the United
States District Court for the District of  Massachusetts  naming,  among others,
SeraNova,  the Company  and  Rajkumar  Koneru,  a director  of the  Company,  as
defendants.  The plaintiff alleges that it invested money in SeraNova as part of
a private  placement of SeraNova  stock in March 2000,  prior to the spin-off of
SeraNova by the Company.  The complaint,  which seeks damages,  alleges that the
Company, as a "controlling person" vis-a-vis SeraNova,  is jointly and severally
liable with and to the extent as SeraNova  for false and  misleading  statements
constituting securities laws violations.  After being served with the complaint,
the Company made a request for  indemnification  from  SeraNova  pursuant to the
various  inter-company  agreements  in connection  with the spin-off.  By letter
dated April 13, 2001,  SeraNova's  counsel,  advised the Company  that  SeraNova
acknowledged liability for such indemnification claims and has elected to assume
the defense of the plaintiff's  claims.  The Company denies the allegations made
and intends to defend  vigorously  the claims made by the  plaintiff.  It is too
early in the dispute process to determine the impact,  if any, that such dispute
will have  upon the  Company's  business,  financial  condition  or  results  of
operations.

     There is no other  material  litigation  pending to which the  Company is a
party or to which any of its property is subject.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

      (a)   Exhibits.

            None.

      (b)   Reports on Form 8-K.

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



                                      -21-
<PAGE>

                                   SIGNATURES

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

                                    Intelligroup, Inc.


DATE: May 14, 2001                  By: /s/ Nagarjun Valluripalli
                                       ---------------------------------------
                                       Nagarjun Valluripalli,
                                       Chairman and Chief Executive Officer
                                       (Principal Executive Officer)


DATE: May 14, 2001                  By: /s/ Nicholas Visco
                                       ---------------------------------------
                                       Nicholas Visco,
                                       Senior Vice President-Finance and
                                       Administration and Chief Financial
                                       Officer
                                       (Principal Financial and Accounting
                                       Officer)