SECURITIES 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 September 30, 2000
                           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 Registrant's classes of
common stock, as of November 3, 2000:

             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 September 30, 2000 and December 31, 1999 (unaudited)....    2

             Consolidated Statements of Operations and Comprehensive
             Income (Loss) for the Three Months and Nine Months Ended
             September 30, 2000 and 1999 (unaudited).......................    3

             Consolidated Statements of Cash Flows for the Nine Months
             Ended September 30, 2000 and 1999 (unaudited).................    4

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

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

    Item 3.  Quantitative and Qualitative Disclosures About Market Risk....   21

PART II.  OTHER INFORMATION

    Item 5.  Other Information.............................................   22

    Item 6.  Exhibits and Reports on Form 8-K..............................   23

SIGNATURES.................................................................   24


                                      - i -
<PAGE>

                          PART I. FINANCIAL INFORMATION

                    Item 1. Consolidated Financial Statements



                                     - 1 -
<PAGE>

                       INTELLIGROUP, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                    SEPTEMBER 30, 2000 AND DECEMBER 31, 1999
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                     September 30,    December 31,
               ASSETS                                                    2000            1999
                                                                     -------------    ------------
<S>                                                                  <C>              <C>
Current Assets:
   Cash and cash equivalents....................................     $   2,013,000    $  5,510,000
   Accounts receivable, less allowance for doubtful accounts
     of $2,861,000 at September 30, 2000 and $2,939,000 at
     December 31, 1999..........................................        18,326,000      27,607,000
   Unbilled services............................................         5,773,000       7,692,000
   Income tax receivable........................................         2,533,000       3,612,000
   Deferred tax asset...........................................         2,481,000       2,481,000
   Other current assets.........................................         9,375,000       2,699,000
   Note receivable - SeraNova...................................        12,618,000              --
   Net current assets of discontinued operations................                --       7,621,000
                                                                       -----------     -----------
        Total current assets....................................        53,119,000      57,222,000

Note receivable - SeraNova......................................                --       8,397,000
Property and equipment, net.....................................         7,747,000       7,744,000
Capitalized software solutions, net.............................         2,770,000         813,000
Intangible assets, net..........................................         4,846,000       5,189,000
Deferred tax asset..............................................         1,370,000              --
Other assets....................................................         1,125,000         835,000
                                                                       -----------     -----------
                                                                     $  70,977,000    $ 80,200,000
                                                                       ===========     ===========

               LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
   Accounts payable.............................................     $   6,007,000    $  3,800,000
   Accrued payroll and related taxes............................         9,544,000       5,527,000
   Accrued expenses and other liabilities.......................         8,269,000       4,273,000
   Income taxes payable.........................................         1,270,000       3,904,000
   Current portion of long-term debt and obligations under
     capital leases.............................................         3,294,000      10,585,000
                                                                       -----------     -----------
        Total current liabilities...............................        28,384,000      28,089,000

Deferred tax liability..........................................                --         806,000
Long-term debt and obligations under capital leases.............           748,000              --
Net non-current liabilities of discontinued operations..........                --       2,651,000

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 and 15,949,000 shares issued and outstanding
     at September 30, 2000 and December 31, 1999, respectively..           166,000         160,000
   Additional paid-in capital...................................        41,360,000      43,356,000
   Retained earnings ...........................................         2,640,000       6,317,000
   Currency translation adjustments.............................        (2,321,000)     (1,179,000)
                                                                       -----------     -----------
      Total shareholders' equity ...............................        41,845,000      48,654,000
                                                                       -----------     -----------
                                                                     $  70,977,000    $ 80,200,000
                                                                       ===========     ===========
</TABLE>

          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 AND NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                             Three Months Ended September 30,   Nine Months Ended September 30,
                                             -------------------------------    -------------------------------
                                                    2000            1999            2000              1999
                                               -------------   -------------    -------------     -------------
<S>                                            <C>            <C>              <C>               <C>
Revenue.....................................   $  27,599,000  $  37,879,000    $  84,340,000     $ 114,506,000
Cost of sales...............................      18,159,000     24,539,000       55,834,000        76,018,000
                                                 -----------    -----------      -----------       -----------
      Gross profit..........................       9,440,000     13,340,000       28,506,000        38,488,000
                                                 -----------    -----------      -----------       -----------
Selling, general and administrative
  expenses..................................       9,406,000     10,447,000       33,546,000        30,730,000
Depreciation and amortization...............         836,000        541,000        2,406,000         1,929,000
Acquisition expenses........................              --             --               --         2,115,000
Restructuring and other special charges.....              --             --               --         7,328,000
                                                 -----------    -----------      -----------       -----------
      Total operating expenses..............      10,242,000     10,988,000       35,952,000        42,102,000
                                                 -----------    -----------      -----------       -----------
      Operating income (loss)...............        (802,000)     2,352,000       (7,446,000)       (3,614,000)
Other income, net...........................          71,000         69,000           95,000           147,000
Interest income (expense), net..............         145,000       (241,000)         305,000          (508,000)
                                                 -----------    -----------      -----------       -----------
Income (loss) from continuing operations
  before income tax provision (benefit).....        (586,000)     2,180,000       (7,046,000)       (3,975,000)
Income tax provision (benefit)..............         596,000        597,000         (865,000)       (1,002,000)
                                                 -----------    -----------      -----------       -----------
Income (loss) from continuing operations....      (1,182,000)     1,583,000       (6,181,000)       (2,973,000)
Income (loss) from discontinued operations,
  net of tax expense (benefit) of $0,
  $205,000, $(2,095,000) and $450,000,
  respectively .............................              --        122,000       (4,891,000)          559,000
                                                 -----------    -----------      -----------       -----------
Net income (loss)...........................   $  (1,182,000) $   1,705,000    $ (11,072,000)    $  (2,414,000)
                                                 ===========    ===========      ===========       ===========

Earnings per share:
     Basic earnings per share:
       Continuing operations ...............   $       (0.07) $        0.10    $       (0.38)    $       (0.19)
       Discontinued operations..............              --           0.01            (0.30)             0.03
                                                 -----------    -----------      -----------       -----------
         Net income (loss) per share........   $       (0.07) $        0.11    $       (0.68)    $       (0.16)
                                                 ===========    ===========      ===========       ===========
       Weighted average number of
       Common shares - Basic................      16,630,000     15,549,000       16,441,000        15,549,000
                                                 ===========    ===========      ===========       ===========

     Diluted earnings per share:
       Continuing operations................   $       (0.07) $        0.10    $       (0.38)    $       (0.19)
       Discontinued operations..............              --           0.01            (0.30)             0.03
                                                 -----------    -----------      -----------       -----------
         Net income (loss) per share........   $       (0.07) $        0.11    $       (0.68)    $       (0.16)
                                                 ===========    ===========      ===========       ===========
       Weighted average number of
       Common shares - Diluted..............      16,630,000     15,551,000       16,441,000        15,549,000
                                                 ===========    ===========      ===========       ===========

Comprehensive Income (Loss)
---------------------------
Net income (loss)...........................   $  (1,182,000) $   1,705,000    $ (11,072,000)    $  (2,414,000)
Other comprehensive loss -
        Currency translation adjustments....        (708,000)       (15,000)        (842,000)         (578,000)
                                                 -----------    -----------      -----------       -----------
Comprehensive income (loss).................   $  (1,890,000) $   1,690,000    $ (11,914,000)    $  (2,992,000)
                                                 ===========    ===========      ===========       ===========
</TABLE>

          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 NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                          For the Nine Months Ended
                                                                       --------------------------------
                                                                        September 30,     September 30,
                                                                             2000              1999
                                                                        -------------     ------------
<S>                                                                     <C>               <C>
Cash flows from operating activities:
   Net loss........................................................     $ (11,072,000)    $ (2,414,000)
   Adjustments to reconcile net loss to net cash provided by
     (used in) operating activities:
       Loss (income) from discontinued operations, net of tax......         4,891,000         (559,000)
       Depreciation and amortization...............................         2,406,000        1,929,000
       Provision for doubtful accounts.............................         2,725,000        2,912,000
       Deferred income taxes.......................................        (2,176,000)          33,000
   Changes in operating assets and liabilities:

     Accounts receivable...........................................         6,556,000       (1,501,000)
     Unbilled services.............................................         1,919,000           95,000
     Other current assets..........................................        (4,812,000)        (354,000)
     Other assets..................................................          (290,000)         716,000
     Accounts payable..............................................         2,207,000       (1,562,000)
     Accrued payroll and related taxes.............................         4,017,000        2,955,000
     Accrued restructuring charges.................................          (524,000)       1,742,000
     Accrued expenses and other liabilities........................         4,520,000        1,182,000
     Income taxes payable..........................................        (2,634,000)      (2,964,000)
                                                                          -----------      -----------
   Cash provided by operating activities of continuing operations..         7,733,000        2,210,000
   Cash used in operating activities of discontinued operations....        (5,879,000)      (2,440,000)
                                                                          -----------      -----------
         Net cash provided by (used in) operating activities.......         1,854,000         (230,000)
                                                                          -----------      -----------

Cash flows from investing activities:
   Purchase of equipment and capitalized software solutions
     by continuing operations......................................        (3,774,000)      (2,134,000)
   Purchase of equipment by discontinued operations................        (5,270,000)        (394,000)
   Acquisition of businesses by discontinued operations ...........                --       (1,682,000)
                                                                          -----------      -----------
         Net cash used in investing activities.....................        (9,044,000)      (4,210,000)
                                                                          -----------      -----------

Cash flows from financing activities:

   Principal payments under capital leases.........................           (19,000)          (6,000)
   Proceeds from exercise of stock options.........................         5,745,000        2,509,000
   Shareholder dividends ..........................................                --         (170,000)
   Other borrowings................................................            30,000               --
   Net change in line of credit borrowings.........................        (7,588,000)      10,647,000
   Net change in note receivable-SeraNova prior to spin-off date...        (7,707,000)      (3,099,000)
   Payment on note receivable-SeraNova subsequent to spin-off date.         3,000,000               --
                                                                          -----------      -----------
    Net cash (used in) provided by financing activities of
       continuing operations.......................................        (6,539,000)       9,881,000
    Net cash provided by (used in) financing activities of
       discontinued operations.....................................        11,149,000         (201,000)
                                                                          -----------      -----------
         Net cash provided by financing activities.................         4,610,000        9,680,000
                                                                          -----------      -----------
   Effect of foreign currency exchange rate changes on cash........          (917,000)        (579,000)
                                                                          -----------      -----------
         Net (decrease) increase in cash and cash equivalents......        (3,497,000)       4,661,000
Cash and cash equivalents at beginning of period...................         5,510,000        3,568,000
                                                                          -----------      -----------
Cash and cash equivalents at end of period.........................     $   2,013,000     $  8,229,000
                                                                          ===========      ===========
Supplemental disclosures of cash flow information:
   Cash paid for income taxes......................................     $   2,512,000     $  2,464,000
   Cash paid for interest..........................................           409,000          508,000
</TABLE>


          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)

(1) BASIS OF PRESENTATION

     The   consolidated   financial   statements  and   accompanying   financial
information  as of  September  30, 2000 and for the three and nine months  ended
September  30, 2000 and 1999 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, 1999,
which were included as part of the Company's Form 10-K.

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

(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
would  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:

<TABLE>
<CAPTION>
                                             Three Months Ended           Nine Months Ended
                                             ------------------           -----------------
                                               September 30,                September 30,
                                               -------------                -------------

                                              2000          1999          2000           1999
                                              ----          ----          ----           ----
<S>                                        <C>           <C>           <C>           <C>
Weighted average number of common
shares................................     16,630,000    15,549,000    16,441,000    15,549,000

Common share equivalents of
outstanding stock options.............             --         2,000            --            --
                                           ----------    ----------    ----------    ----------
Weighted average number of common
shares assuming dilution..............     16,630,000    15,551,000    16,441,000    15,549,000
                                           ==========    ==========    ==========    ==========
</TABLE>


                                     - 5 -
<PAGE>

     Stock options,  which would be  antidilutive  (3,652,000  outstanding as of
September 30, 2000) have been excluded from the  calculations  of diluted shares
outstanding and diluted earnings per share.

(3) LINES OF CREDIT

     On May 31, 2000,  the Company  entered into a three-year  revolving  credit
facility  agreement  with PNC Bank,  N.A.  (the  "Bank").  The  credit  facility
agreement  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  EuroRate  plus 2.5% to 1.75% 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 of  September  30, 2000,  the Company had  outstanding
borrowings under the credit facility of approximately $3.0 million.  The Company
estimates  undrawn  availability  under the credit facility to be  approximately
$7.3 million as of September 30, 2000.

     The  credit  agreement  provides  for  the  following  financial  covenants
(exclusive  of  SeraNova),  among other  things,  (1) the Company must  maintain
consolidated  net worth,  as  defined  ("consolidated  net  worth") of (a) $42.0
million at each of June 30, 2000, September 30, 2000, and December 31, 2000; (b)
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 (c) 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 worth, as defined  ("unconsolidated  net worth") of (a) $39.0
million at each of June 30, 2000, September 30, 2000, and December 31, 2000; (b)
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 (c)
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 regards to the financial condition
of the assets,  liabilities  and operations of the Company.  As of September 30,
2000, the Company was in compliance with all financial covenants.



                                     - 6 -
<PAGE>

(4) DISCONTINUED OPERATIONS

     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.

     The following  unaudited  selected financial data for SeraNova is presented
for informational purposes only.

<TABLE>
<CAPTION>
                                    THREE MONTHS ENDED JUNE 30,       SIX MONTHS ENDED JUNE 30,
                                    ----------------------------      -------------------------
                                       2000              1999            2000          1999
                                       ----              ----            ----          ----
<S>                                <C>               <C>            <C>            <C>
Revenue                            $19,843,000       $8,614,000     $36,019,000    $16,602,000
Pre-tax income/(loss)               (2,797,000)         217,000      (6,986,000)       676,000
Income tax expense/(benefit)          (985,000)          65,000      (2,095,000)       244,000
Net income/(loss)                   (1,812,000)         152,000      (4,891,000)       432,000
</TABLE>


                                          June 30, 2000      December 31, 1999
                                          -------------      -----------------
Accounts receivable, net                   $13,052,000           $7,456,000
Unbilled services                            7,419,000            3,680,000
Property and equipment, net                  7,408,000            2,863,000
Intangible assets,  net                      3,365,000            3,492,000
All other assets                             5,630,000            1,389,000
Note payable-Intelligroup                   15,059,000            8,397,000
All other liabilities                       11,111,000            5,513,000
Total shareholders' equity                  10,704,000            4,970,000

(5) NOTE RECEIVABLE - SERANOVA

     On May 31,  2000,  SeraNova  and the  Company  formalized  a $15.1  million
unsecured  promissory note ("Note")  relating to net borrowings by SeraNova from
the Company  through such date.  The Note bears  interest at the prime rate plus
1/2%. A mandatory  pre-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.



                                     - 7 -
<PAGE>

(5) NOTE RECEIVABLE - SERANOVA (CONTINUED)

     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  would  be  required  to  make a
prepayment  on the Note as a result of the stock  financing.  Subsequently,  the
Company finalized with SeraNova the terms of an agreement and waiver to the Note
to waive,  subject to certain  conditions,  certain of the mandatory  prepayment
obligations arising as a result of the financing. The terms of the agreement and
waiver included,  among other things, that 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.

(6) RESTRUCTURING AND OTHER SPECIAL CHARGES

     In connection with  management's plan to reduce costs and improve operating
efficiencies,  the Company incurred a non-recurring charge of approximately $5.6
million 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
the 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
during the nine month period ended September 30, 2000 is as follows:

<TABLE>
<CAPTION>
                               Charges to                    Accrued Costs                     Accrued Costs
                               Operations     Costs Paid      December 31,      Costs Paid     September 30,
                               during 1999    during 1999         1999          During 2000        2000
                               -----------    -----------    -------------      -----------    -------------

<S>                             <C>           <C>               <C>               <C>            <C>
Severance and related costs..   $5,027,000    $4,162,000        $865,000          $524,000       $341,000

Other costs primarily to
exit facilities, contracts,
and certain activities.......      601,000       517,000          84,000                --         84,000
                                ----------    ----------        --------          --------       --------
                                $5,628,000    $4,679,000        $949,000          $524,000       $425,000
                                ==========    ==========        ========          ========       ========
</TABLE>

     Additionally,  in 1999 the  Company  recorded  a  reserve  of $1.7  million
against an outstanding receivable from a large account, whose parent corporation
filed for protection under Chapter 11 of the U.S. bankruptcy laws.



                                     - 8 -
<PAGE>

(7) SEGMENT DATA AND GEOGRAPHIC INFORMATION

     The Company operates in one industry,  information technology services. 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  includes  the  implementation,
          integration,  development,  and customization of solutions for clients
          utilizing a class of application products known as Enterprise Resource
          Planning software.  This class of products includes software developed
          by such companies as SAP,  Oracle,  PeopleSoft,  and Baan. The segment
          also includes  application  service provider  offerings  including the
          development,   customization,   and   integration  of  enterprise  and
          e-commerce  applications,  hosted  externally,  and made accessible to
          customers over a secure network, on a monthly, per seat,  subscription
          basis.

     o    Internet  Applications Services group - provides Internet professional
          services to  businesses.  Such services  enable clients to communicate
          and conduct commerce  between a company and 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 and nine months ended September 30,
2000 and 1999.



                                     - 9 -
<PAGE>

(7) SEGMENT DATA AND GEOGRAPHIC INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
                            United
                            States       Asia-Pacific     Europe         India          Total
                          -----------    ------------     ------         -----          -----
<S>                       <C>             <C>           <C>            <C>           <C>
Three months ended
------------------
September 30, 2000
------------------
Revenue                   $18,978,000     $2,923,000    $ 4,385,000    $1,313,000    $ 27,599,000
Depreciation and
  amortization                529,000         31,000        177,000        99,000         836,000
Operating income (loss)      (418,000)       247,000       (369,000)     (262,000)       (802,000)
Total assets               50,995,000      4,628,000     10,365,000     4,989,000      70,977,000

Three months ended
------------------
September 30, 1999
------------------
Revenue                   $27,320,000     $2,065,000     $6,692,000    $1,802,000    $ 37,879,000
Depreciation and
  amortization                399,000         31,000         49,000        62,000         541,000
Operating income (loss)       849,000          8,000        773,000       722,000       2,352,000
Total assets               54,081,000      3,244,000      7,583,000     4,732,000      69,640,000

Nine months ended
-----------------
September 30, 2000
------------------
Revenue                   $59,611,000     $7,490,000    $13,678,000    $3,561,000    $ 84,340,000
Depreciation and
  amortization              1,501,000         87,000        520,000       298,000       2,406,000
Operating income (loss)    (5,461,000)       (33,000)    (1,099,000)     (853,000)     (7,446,000)

Nine months ended
-----------------
September 30, 1999
------------------
Revenue                   $84,347,000     $6,565,000    $19,135,000    $4,459,000    $114,506,000
Depreciation and
  amortization              1,504,000         85,000        151,000       189,000       1,929,000
Operating income (loss)    (5,304,000)      (299,000)       151,000     1,838,000      (3,614,000)
</TABLE>

     Included above are  application  maintenance  and support  revenues of $5.0
million and $655,000 for the three  months  ended  September  30, 2000 and 1999,
respectively.  The  application  maintenance  and support  revenues for the nine
months  ended  September  30, 2000 and 1999 are $15.8  million and $1.1  million
respectively.  Other  information  related to the  application  maintenance  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 RESULTS OF OPERATIONS AND
               FINANCIAL CONDITION.

OVERVIEW

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

     Since the Company's  inception in 1987, we have built our reputation on the
design, development,  implementation and support of complex technology solutions
based  primarily on SAP,  Oracle and  PeopleSoft  products,  utilizing  our best
business practices,  methodologies and toolsets.  In 1999, we made the strategic
decision to leverage our  "traditional"  application  integration and consulting
experience  and  reposition  Intelligroup  for future  growth by focusing on the
emerging Application Service Provider ("ASP") market.

     As  a  global  ASP  of  customized,   scalable  enterprise  and  e-commerce
solutions, we have focused our development and marketing efforts on the vertical
industries  in which we have built  expertise and which we believe 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
our   application   implementation,   management   and  support   resources  and
capabilities.  Utilizing the ASP model, our "software-to-service"  solutions are
contracted on a predictable subscription basis and delivered to customers over a
secure global network. As the single point of accountability to the customer, we
support and manage 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,  we can help  assure  the  on-going
reliability  of security,  performance,  service and  long-term  support for the
customer.

     Our ASPPlus  Hosting  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.  Our strategic
alliances with such software leaders as SAP,  PeopleSoft,  Niku,  MicroStrategy,
Onyx, Vignette and Ariba give our 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 we
deliver and support  solutions for customers  worldwide,  Intelligroup  became a
founding  Platinum member of AT&T's Ecosystem for ASPs. As our strategic partner
and  infrastructure  provider,  AT&T  provides  the data  center,  hardware  and
operating systems, and requisite bandwidth and communications capabilities.



                                     - 11 -
<PAGE>

These  strategic  alliances  and hosting  partnerships  not only support our 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, we can create for our customers an end-to-end
technology value chain that delivers e-commerce and enterprise  solutions across
the entire enterprise.

     Key  to  our  strategy  is  the  ASPPlus  Advanced  Development  Center  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 (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  SEI  workforce
improvement  with software process  improvement,  for which we have achieved the
SEI Capability  Maturity Model for  Software(R)  (CMM)(SM) Level 5 certification
for continuous improvement of our software engineering.  In addition, we are ISO
9001-certified for software development, support and optimization.

     Intelligroup's  ASPPlus eSourcing  Services are focused on the delivery and
support of outsourced ERP and Internet  implementation and maintenance services.
ASPPlus  eSourcing  Services provide full life cycle support of ERP and Internet
applications through our offshore facilities and resources.

     The majority of our  revenues  continue to be  generated  from  traditional
professional  information  technology  services  rendered  to  customers.  These
services   range  from  providing   customers   with  a  single   consultant  to
multi-personnel, full-scale projects. We provide these services to our customers
primarily on a time and materials basis and pursuant to written  contracts which
can be terminated with limited advance notice,  typically not more than 30 days,
and without significant  penalty,  generally limited to fees earned and expenses
incurred  by the  Company  through  the date of  termination.  We provide  these
services  either  directly  to  end-user  organizations,  or  as a  member  of a
consulting team assembled by another information  technology consulting firm, to
Fortune 1000 and other large and mid-sized  companies.  In general,  the Company
bills its customers semi-monthly for the services provided by our consultants at
contracted rates. Where contractual provisions permit, customers also are billed
for reimbursement of expenses incurred by the Company on the customers' behalf.

     The  Company  has  provided  traditional  professional  services on certain
projects  in which it, at the request of the  clients,  offers a fixed price for
its  services.  For the year ended  December  31,  1999,  revenues  derived from
projects  under  fixed  price  contracts  represented  approximately  9% of  the
Company's total revenue.  Fixed price contracts,  in the aggregate,  represented
16% of the Company's  total revenue  during the nine months ended  September 30,
2000.  No single  fixed price  project was  material to the  Company's  business
during the nine months ended  September 30, 1999 and 2000. The Company  believes
that it will continue to offer fixed price projects. The Company has had limited
prior  experience in pricing and performing  under fixed price  arrangements and
believes  that there are  certain  risks  related  thereto  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



                                     - 12 -
<PAGE>

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 the nine months  ended  September  30,  2000,  and the year ended
December 31, 1999,  the  Company's  ten largest  customers  accounted for in the
aggregate approximately 42% and 43% of its revenue,  respectively.  For the nine
months ended September 30, 2000, one customer accounted for approximately 12% of
revenue.  For the year ended  December 31,  1999,  one  customer  accounted  for
approximately  14% of revenue.  During the nine months ended September 30, 2000,
and the year ended December 31, 1999,  approximately 62% and 53%,  respectively,
of the  Company's  total  revenue was derived from projects in which the Company
implemented  software  developed by SAP.  During the nine months ended September
30,  2000,  and the year ended  December 31,  1999,  approximately  26% and 33%,
respectively,  of the Company's total revenue was derived from projects in which
the Company implemented software developed by PeopleSoft. During the nine months
ended September 30, 2000, and the year ended December 31, 1999, approximately 9%
of the  Company's  total  revenue was derived from projects in which the Company
implemented 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 Company of a consultant on an hourly basis) and
personnel  utilization rates (billable hours divided by paid hours). The Company
believes that turnkey  project  management  assignments  typically  carry higher
margins. The Company's inability to continue winning such higher-margin  turnkey
project  management  assignments and more complex  projects may adversely impact
the Company's future revenue and growth.

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

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 to
comprehensive ASPPlus solutions and higher margin turnkey management assignments
and more complex  projects  and to utilize its  proprietary  implementation  and
upgrade methodology in an increasing number of projects. In addition, statements
regarding the Company's intent to expand its service  offerings through internal
growth   and   acquisitions   are   also   forward-looking    statements.   Such
forward-looking  statements include risks and uncertainties,  including, but not
limited to:

    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


                                     - 13 -
<PAGE>

          technology  outsourcing  trends,  (c) the  timing,  size and  stage of
          projects,  (d)  timing  and impact of  acquisitions,  (e) new  service
          introductions  by the Company or its competitors and the timing of new
          product  introductions  by the Company's  ERP 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 (a) to continue  developing  and  improving  its
          operational,  financial  and other  internal  systems,  as well as its
          business  development  capabilities,  (b) to attract,  train,  retain,
          motivate and manage its  employees,  (c) to continue to maintain  high
          rates of employee  utilization  at profitable  billing  rates,  (d) to
          successfully  integrate the personnel and  businesses  acquired by the
          Company, and (e) to 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 its current line of
          business;

    o     the Company's  reliance on a continued  relationship  with SAP America
          and the Company's present status as a SAP National Logo 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     the  Company's   ability  to  continue  to  diversify  its  offerings,
          including growth in its Oracle and PeopleSoft services;

    o     uncertainties  resulting  from  pending  litigation  matters  and from
          potential  administrative  and  regulatory  immigration  and  tax  law
          matters;

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

    o     the continued  uncertainty of the application service provider ("ASP")
          market and revenues derived from anticipated ASP business.


                                     - 14 -
<PAGE>

     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 revenue:

<TABLE>
<CAPTION>
                                                             Percentage of Revenue
                                              -----------------------------------------------------
                                                  Three Months Ended            Nine Months Ended
                                                    September 30,                September 30,
                                              -------------------------    ------------------------
                                                  2000          1999          2000           1999
                                                  ----          ----          ----           ----
<S>                                               <C>           <C>           <C>            <C>
Revenue..................................         100.0%        100.0%        100.0%         100.0%
Cost of sales............................          65.8          64.8          66.2           66.4
                                                 ------        ------        ------         ------
    Gross profit.........................          34.2          35.2          33.8           33.6
Selling, general and administrative
  expenses...............................          34.1          27.6          39.8           26.8
Depreciation and amortization expenses...           3.0           1.4           2.8            1.7
Acquisition expenses.....................            --            --            --            1.8
Restructuring and other special charges..            --            --            --            6.4
                                                 ------        ------        ------         ------
    Operating income (loss)..............          (2.9)          6.2          (8.8)          (3.1)
Interest and other income (expense), net.           0.8          (0.5)          0.5           (0.3)
                                                 ------        ------        ------         ------
Income (loss) from continuing operations
 before income tax expense (benefit).....          (2.1)          5.7          (8.3)          (3.4)
Income tax expense (benefit).............           2.2           1.6          (1.0)          (0.9)
                                                 ------        ------        ------         ------
Income (loss) from continuing operations.          (4.3)%         4.1%         (7.3)%         (2.5)%
                                                 ======        ======        ======         ======
</TABLE>



                                     - 15 -
<PAGE>

THREE MONTHS ENDED  SEPTEMBER 30, 2000 COMPARED TO THREE MONTHS ENDED  SEPTEMBER
30, 1999

     The following discussion compares the quarters ended September 30, 2000 and
September 30, 1999, in each case without SeraNova,  Inc.  ("SeraNova") which was
treated as discontinued operations as of the quarter ended June 30, 2000.

     Revenue.  Total revenue  decreased by 27.1%,  or $10.3 million,  from $37.9
million  during the three months ended  September  30,  1999,  to $27.6  million
during the three months ended  September  30, 2000.  This decrease was primarily
attributable to the anticipated  decline in sales of traditional  implementation
services  offerings and slower than expected  growth in outsourcing  and hosting
revenues  as the  Company  refocuses  resources  into  the  application  service
provider market.

     Gross profit.  The Company's cost of sales  primarily  includes the cost of
salaries to consultants  and related  employee  benefits and payroll taxes.  The
Company's cost of sales decreased by 26.0%, or $6.4 million,  from $24.5 million
during the three months ended  September  30, 1999 to $18.2  million  during the
three months ended September 30, 2000. The Company's  gross profit  decreased by
29.4%,  or $3.9  million,  from  $13.3  million  during the three  months  ended
September 30, 1999 to $9.4 million  during the three months ended  September 30,
2000.  These  decreases  were  attributable  to  lower  revenues.  Gross  margin
decreased to 34.2% during the three months ended  September  30, 2000 from 35.2%
during the three  months  ended  September  30,  1999.  The  Company was able to
maintain  gross margins  comparable to prior quarters by  aggressively  managing
non-billable consultant time.

     Selling,  general  and  administrative   expenses.   Selling,  general  and
administrative  expenses  primarily  consist  of  administrative  salaries,  and
related benefits costs,  occupancy costs, sales person compensation,  travel and
entertainment, costs associated with the Advanced Development Center and related
development costs and professional  fees.  Selling,  general and  administrative
expenses  decreased by 10.0%,  or $1.0 million,  from $10.4  million  during the
three months ended  September  30, 1999 to $9.4 million  during the three months
ended  September 30, 2000 but increased as a percentage of revenue from 27.6% to
34.1%,  respectively.  While the Company  increased  certain sales and marketing
expenditures  to gain access to the  application  service  provider  market,  it
aggressively managed other discretionary  expenditures,  resulting in an overall
decrease in selling,  general and  administrative  expenses in absolute dollars.
The increase in selling, general and administrative expenses, as a percentage of
revenue, is primarily related to the decline in revenues.

     Depreciation  and  amortization.  Depreciation  and  amortization  expenses
increased  54.5% to $836,000  during the three months ended  September 30, 2000,
compared to $541,000  during the three months  ended  September  30,  1999.  The
increase is primarily due to additional computers, equipment and software placed
in service since September 30, 1999, in support of the ASPPlus business model.

     Interest income  (expense).  The Company earned  approximately  $415,000 in
interest  income  during the three months ended  September  30, 2000,  primarily
related to the note receivable with SeraNova. The Company incurred approximately
$270,000 in interest expense



                                     - 16 -
<PAGE>

during  the  three  months  ended  September  30,  2000,  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.  While the Company  experienced  an
overall  pre-tax  loss,   there  were  profits   generated  in  certain  foreign
jurisdictions,  including  Puerto  Rico,  which  resulted in tax expense for the
quarter ended September 30, 2000.  Although the Company expects foreign taxes to
produce  foreign  tax credits in the United  States,  the ability to apply these
credits may be limited  and,  therefore,  the  Company has  provided a valuation
allowance  against such tax credits,  which has negatively  impacted  income tax
expense.  The  Company's  effective  tax rate was 101.7% and 27.4% for the three
months ended  September 30, 2000 and 1999,  respectively.  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.  For the three  months
ended  September 30, 2000,  the tax holiday  unfavorably  impacted the Company's
effective tax rate by  approximately  5.7%,  while the  favorable  effect in the
three  months  ended  September  30,  1999  was  12.6%.   Based  on  anticipated
profitability in the near future,  management believes all recorded net deferred
tax assets are more likely than not to be realized.

NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1999

     The following  discussion compares the nine months ended September 30, 2000
and  September  30, 1999,  in each case without  SeraNova,  which was treated as
discontinued operations as of the quarter ended June 30, 2000.

     Revenue.  Total revenue  decreased by 26.3%, or $30.2 million,  from $114.5
million during the nine months ended September 30, 1999, to $84.3 million during
the  nine  months  ended   September  30,  2000.  This  decrease  was  primarily
attributable to the anticipated  decline in sales of traditional  implementation
services  offerings and slower than expected  growth in outsourcing  and hosting
revenues  as the  Company  refocuses  resources  into  the  application  service
provider market.

     Gross profit.  The  Company's  cost of sales  decreased by 26.6%,  or $20.2
million,  from $76.0 million during the nine months ended  September 30, 1999 to
$55.8 million  during the nine months ended  September  30, 2000.  The Company's
gross profit decreased by 25.9%, or $10.0 million, from $38.5 million during the
nine months ended  September  30, 1999 to $28.5  million  during the nine months
ended September 30, 2000.  These decreases were  attributable to lower revenues.
Gross margin  increased to 33.8% during the nine months ended September 30, 2000
from 33.6% during the nine months ended September 30, 1999. The Company was able
to slightly  improve gross margins  compared to the prior period by aggressively
managing non-billable consultant time.

     Selling,  general  and  administrative   expenses.   Selling,  general  and
administrative  expenses increased by 9.2%, or $2.8 million,  from $30.7 million
(excluding restructuring, acquisition and other special charges) during the nine
months ended  September 30, 1999 to $33.5  million  during the nine months ended
September 30, 2000 and increased as a percentage of revenue from 26.8% to 39.8%,
respectively. The increase in selling, general and administrative



                                     - 17 -
<PAGE>

expenses,  in absolute  dollars and as a  percentage  of revenue,  is  primarily
related to additional sales staff and expanded  marketing efforts as the Company
focuses resources around the emerging application service provider market.

     Depreciation  and  amortization.  Depreciation  and  amortization  expenses
increased 24.7% to $2.4 million during the nine months ended September 30, 2000,
compared to $1.9 million  during the nine months ended  September 30, 1999.  The
increase is primarily due to additional computers, equipment and software placed
in service since September 30, 1999, in support of the ASPPlus business model.

     Acquisition  expense.  During the nine months ended September 30, 1999, the
Company incurred costs of $2.1 million in connection with the acquisition of the
Empower Companies.

     Restructuring  and  other  special  charges.  For  the  nine  months  ended
September 30, 1999, the Company incurred a non-recurring  charge of $5.6 million
related to  restructuring  initiatives in connection with  management's  plan to
reduce  costs and  improve  operating  efficiencies.  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 the 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.  Additionally,  the
Company recorded a reserve of approximately  $1.7 million against an outstanding
receivable  from a  large  ERP  account,  whose  parent  corporation  filed  for
protection under Chapter 11 of the U.S. bankruptcy laws.

     Interest income  (expense).  The Company earned  approximately  $773,000 in
interest  income  during the nine months ended  September  30,  2000,  primarily
related to the note receivable with SeraNova. The Company incurred approximately
$468,000 in interest  expense  during the nine months ended  September 30, 2000,
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.  While the Company  experienced  an
overall  pre-tax loss for the nine months ended  September 30, 2000,  there were
profits  generated  in  foreign  jurisdictions,  including  Puerto  Rico,  which
resulted in tax expense.  Although the Company  expects  payment of such foreign
taxes to produce foreign tax credits in the United States,  the ability to apply
these  credits  may be  limited  and,  therefore,  the  Company  has  provided a
valuation  allowance  against such tax credits,  which has  negatively  impacted
income tax expense. The Company's effective tax rate was (12.3)% and (25.2)% for
the nine months ended  September 30, 2000 and 1999,  respectively.  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. For the nine months ended
September 30, 2000, the tax holiday unfavorably impacted the Company's effective
tax rate by  approximately  3.1%,  while the favorable effect in the nine months
ended   September  30,  1999  was  16.5%.   Based  on  current  and  anticipated
profitability, management believes all recorded net deferred tax assets are more
likely than not to be realized.



                                     - 18 -
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

     The Company had cash and cash equivalents of approximately  $2.0 million at
September  30, 2000,  and $5.5  million at December  31,  1999.  The Company had
working  capital of $24.7  million at  September  30, 2000 and $29.1  million at
December 31, 1999.

     Cash provided by operating  activities of  continuing  operations  was $7.7
million  during the nine months ended  September 30, 2000,  resulting  primarily
from the decreases in accounts receivable and unbilled services and increases in
accrued  payroll and related taxes and accrued  expenses and other  liabilities,
partially  offset by the net loss from continuing  operations.  The decreases in
accounts  receivable  and  unbilled  services  result from  enhanced  credit and
collection  efforts as well as a decrease in  revenues.  The increase in accrued
payroll and related  taxes  results  from bonus and  commission  payment  timing
differences. The increase in accrued expenses and other liabilities results from
accruals for costs associated with the Company's  strategic  hosting  alliances.
Cash  provided by operating  activities of  continuing  operations  for the nine
months ended September 30, 1999 was $2.2 million.

     The Company  invested $3.8 million and $2.1 million in computer  equipment,
office furniture and fixtures and capitalized software solutions during the nine
months ended September 30, 2000 and 1999,  respectively.  The increase  reflects
the  purchases  of computer  equipment  and office  furniture  and  fixtures for
consultants  and  administrative  staff,  purchases  of software  solutions  and
internally-developed software costs for customers.

     On May 31, 2000,  the Company  entered into a three-year  revolving  credit
facility  agreement  with PNC Bank,  N.A.  (the  "Bank").  The  credit  facility
agreement  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  EuroRate  plus 2.5% to 1.75% 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 of  September  30, 2000,  the Company had  outstanding
borrowings under the credit facility of approximately $3.0 million.  The Company
estimates  undrawn  availability  under the credit facility to be  approximately
$7.3 million as of September 30, 2000.

     The  credit  agreement  provides  for  the  following  financial  covenants
(exclusive  of  SeraNova),  among other  things,  (1) the Company must  maintain
consolidated  net worth,  as  defined  ("consolidated  net  worth") of (a) $42.0
million at each of June 30, 2000, September 30, 2000, and December 31, 2000; (b)
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 (c) 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 worth, as defined  ("unconsolidated  net worth") of (a) $39.0
million at each of June 30, 2000, September 30, 2000, and December 31, 2000; (b)
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 (c)
at least 105% of unconsolidated net worth as of the immediately preceding fiscal
year-end as at each such fiscal year-end subsequent to



                                     - 19 -
<PAGE>

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 regards to the
financial condition of the assets, liabilities and operations of the Company. As
of  September  30,  2000,  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 ("Note")  relating to net borrowings by SeraNova from
the Company  through such date.  The Note bears  interest at the prime rate plus
1/2%. A mandatory  pre-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  would  be  required  to  make a
prepayment  on the Note as a result of the stock  financing.  Subsequently,  the
Company finalized with SeraNova the terms of an agreement and waiver to the Note
to waive,  subject to certain  conditions,  certain of the mandatory  prepayment
obligations arising as a result of the financing. The terms of the agreement and
waiver included,  among other things, that 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.

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  which exist in the
various  regional  markets in which the Company  participates  and the potential
actions  which  may or may  not  be  taken  by  the  Company's  competitors  and
suppliers.



                                     - 20 -
<PAGE>

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.



                                     - 21 -
<PAGE>

PART II.  OTHER INFORMATION

ITEM 5.  OTHER INFORMATION.

     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.  Accordingly,  the assets,  liabilities  and results of operations of
SeraNova  have  been  reported  as  discontinued   operations  for  all  periods
presented.

     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.

     Shares  of the  Company's  common  stock  continue  to trade on the  Nasdaq
National  Market under the ticker symbol ITIG.  Shares of SeraNova  common stock
trade on the Nasdaq National Market under the ticker symbol SERA.

     As of July 6, 2000, the Company adjusted the exercise price of all employee
and director stock options to offset the reduction in option value caused by the
spin-off of SeraNova.  The exercise price of each stock option grant outstanding
as of July 5, 2000, was adjusted  based on the percentage  change in the closing
price of the Company's stock on the  distribution  date of July 5, 2000, and the
ex-dividend date of July 6, 2000. In accordance with FASB Interpretation No. 44,
Accounting for Certain  Transactions  involving Stock Compensation,  the Company
has  concluded  that  there are no  accounting  consequences  for  changing  the
exercise price of outstanding stock options as a result of the spin-off.

     On May 31,  2000,  SeraNova  and the  Company  formalized  a $15.1  million
unsecured  promissory note ("Note")  relating to net borrowings by SeraNova from
the Company  through such date.  The Note bears  interest at the prime rate plus
1/2%. A mandatory  pre-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  would  be  required  to  make a
prepayment  on the Note as a result of the stock  financing.  Subsequently,  the
Company finalized with SeraNova the terms of an agreement and waiver to the Note
to waive,  subject to certain  conditions,  certain of the mandatory  prepayment
obligations arising as a result of the financing. The terms of the agreement and
waiver included,  among other things, that 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,



                                     - 22 -
<PAGE>

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.


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

        (a)    Exhibits.

        10.1   Agreement  and  Waiver  with  respect  to  Amended  and  Restated
               Promissory  Note by and between the  Company and  SeraNova,  Inc.
               dated as of September 29, 2000.

        27.1   Financial Data Schedule for the nine-month period ended September
               30, 2000.

        27.2   Financial  Data  Schedule  for  the   three-month   period  ended
               September 30, 2000.

        27.3   Financial Data Schedule for the nine-month period ended September
               30, 1999.

        27.4   Financial  Data  Schedule  for  the   three-month   period  ended
               September 30, 1999.

        (b)    Reports on Form 8-K.

               On July 17, 2000, the Company filed a report on Form 8-K relating
               to (i)  the  Company's  distribution  of  all of the  outstanding
               shares of the common  stock of  SeraNova  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  that  certain  Distribution
               Agreement  dated as of January 1, 2000  between  the  Company and
               SeraNova;  and (ii) a $15,100,000 unsecured Promissory Note dated
               May 31, 2000,  between the Company and  SeraNova  relating to net
               borrowings by SeraNova from the Company through such date.

               On September  14, 2000,  the Company filed a report on Form 8-K/A
               to file the  financial  statements,  related pro forma  financial
               statements and exhibits  required  pursuant to Item 7 of the Form
               8-K filed on July 17, 2000.



                                     - 23 -
<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: November 14, 2000         By: /s/ Nagarjun Valluripalli
                                   ---------------------------------------------
                                    Nagarjun Valluripalli,
                                    Chairman and Chief Executive Officer
                                    (Principal Executive Officer)


DATE: November 14, 2000         By: /s/ Nicholas Visco
                                   ---------------------------------------------
                                    Nicholas Visco,
                                    Vice President-Finance and
                                    Chief Financial Officer
                                    (Principal Financial and Accounting Officer)


                                     - 24 -