SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                              --------------------

                                  FORM 10-Q/A

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

                For the quarterly period ended September 30, 1998
                           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
                          ----------------------------
                           (Issuer'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 9, 1998:  

            Class                               Number of Shares
            -----                               ----------------
Common Stock, $.01 par value                         12,668,175





<PAGE>
                               EXPLANATORY NOTE

   
     Intelligroup, Inc., a New Jersey corporation (the "Company"), hereby amends
Items 1 and 2 of Part I and Item 6 of Part II of its  Quarterly  Report  on Form
10-Q,  which was filed with the Securities  and Exchange  Commission on November
12,  1998.  Items 1 and 2 of Part I are hereby  amended to reflect the  restated
financial  information  of  the  Company  as  a  result  of  the  CPI  Resources
transaction,  which has been accounted for as a pooling of interests.  Item 6 of
Part II is hereby amended to reflect such restated financial  information on the
financial data schedule.
    

<PAGE>
                          PART I. FINANCIAL INFORMATION

                    ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS


                                     - 1 -
<PAGE>
                       INTELLIGROUP, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                    September 30, 1998 and December 31, 1997

<TABLE>
<CAPTION>
                                                           September 30,    December 31,
                                                               1998             1997
                                                           ------------     -----------
                                                            (unaudited)
                     ASSETS
<S>                                                        <C>             <C>         
Current Assets:
   Cash and cash equivalents.............................  $  5,439,000    $  8,503,000
   Accounts receivable, less allowance for doubtful
     accounts of  $1,800,000 at September 30, 1998
     and $799,000 at December 31, 1997...................    23,572,000      18,995,000
   Unbilled services.....................................    14,115,000       7,834,000
   Deferred income taxes.................................       404,000         404,000
   Other current assets..................................     1,907,000         676,000
                                                           ------------    ------------
         Total current assets............................    45,437,000      36,412,000

Equipment, net ..........................................     7,186,000       3,484,000
Cost in excess of fair value of net assets acquired, net.     4,398,000              --
Other assets.............................................       946,000       337,000
                                                           ------------    ------------
                                                           $ 57,967,000    $ 40,233,000
                                                           ============    ============

      LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
   Accounts payable......................................  $  3,662,000    $  1,701,000
   Accrued payroll and related taxes.....................     6,486,000       2,636,000
   Accrued expenses and other liabilities................     3,191,000       1,465,000
   Income taxes payable..................................     1,469,000       1,253,000
   Current portion of obligations under capital leases...        18,000          20,000
                                                           ------------    ------------
         Total current liabilities.......................    14,826,000       7,075,000

Obligations under capital leases, less current portion...        54,000          51,000
Other liabilities........................................            --         126,000
Deferred income taxes ...................................       171,000         171,000

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; 12,667,875 and 12,358,981 shares
      issued and outstanding at September 30, 1998
      and December 31, 1997, respectively................       127,000         124,000
   Additional paid-in capital............................    34,634,000      30,175,000
   Retained earnings ....................................     8,847,000       2,592,000
   Currency translation adjustment.......................      (692,000)       (159,000)
                                                           ------------    ------------
   Minority Interest in CPI Consulting...................            --          78,000
                                                           ------------    ------------
        Total shareholders' equity ......................    42,916,000      32,810,000
                                                           ------------    ------------
                                                           $ 57,967,000    $ 40,233,000
                                                           ============    ============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                     - 2 -
<PAGE>


                       INTELLIGROUP, INC. AND SUBSIDIARIES

       CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME For the
         Three Months and Nine Months Ended September 30, 1998 and 1997
                                   (unaudited)
<TABLE>
<CAPTION>

                                   Three Months Ended September 30,   Nine Months Ended September 30,
                                   --------------------------------   -------------------------------
                                        1998            1997               1998               1997
                                    ------------     ------------      ------------       ------------

<S>                                 <C>              <C>               <C>                <C>         
Revenue..........................   $ 35,769,000     $ 23,727,000      $ 98,527,000       $ 61,663,000
Cost of sales....................     22,899,000       15,902,000        63,554,000         42,857,000
                                    ------------     ------------      ------------       ------------
      Gross profit...............     12,870,000        7,825,000        34,973,000         18,806,000

Selling, general and
 administrative expenses.........      9,284,000        5,323,000        25,061,000         13,034,000
Acquisition expenses.............             --               --           434,000                 --
                                    ------------     ------------      ------------       ------------
      Operating expenses.........      9,284,000        5,323,000        25,495,000         13,034,000
                                    ------------     ------------      ------------       ------------

      Operating income...........      3,586,000        2,502,000         9,478,000          5,772,000

Interest - net...................        181,000          136,000           278,000            251,000
Minority interest................             --          (24,000)          (82,000)           (40,000)
                                    ------------     ------------      ------------       ------------

Income before provision for
 income taxes....................      3,767,000        2,614,000         9,674,000          5,983,000

Provision for income taxes.......      1,149,000          957,000         2,909,000          2,230,000
                                    ------------     ------------      ------------       ------------

Net income.......................   $  2,618,000     $  1,657,000      $  6,765,000       $  3,753,000
                                    ============     ============      ============       ============

Earnings per share:
   Basic earnings per share:
      Net income per share.......   $       0.21     $       0.14      $       0.54       $       0.33
                                    ============     ============      ============       ============

      Weighted average number of
       common shares - Basic.....     12,647,000       12,029,000        12,481,000         11,477,000
                                    ============     ============      ============       ============


   Diluted earnings per share:
      Net income per share.......   $       0.20     $       0.13      $       0.52       $       0.31
                                    ============     ============      ============       ============

      Weighted average number of
       common shares - Diluted...     13,157,000       12,698,000        12,978,000         11,926,000
                                    ============     ============      ============       ============


Comprehensive Income
--------------------

Net income.......................   $  2,618,000     $  1,657,000      $  6,765,000       $  3,753,000

Other comprehensive income -
      Currency translation 
      adjustments................       (173,000)              --          (533,000)                --
                                    ------------     ------------      ------------       ------------


Comprehensive income.............   $  2,445,000     $  1,657,000      $  6,232,000       $  3,753,000
                                    ============     ============      ============       ============
</TABLE>

          See accompanying notes to consolidated financial statements.


                                     - 3 -
<PAGE>


                       INTELLIGROUP, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                For the Nine Months Ended September 30, 1998 and
                               September 30, 1997
                                   (unaudited)
<TABLE>
<CAPTION>

                                                         September 30,  September 30,
                                                             1998           1997   
                                                         ------------   ------------
<S>                                                        <C>            <C>       
Cash flows from operating activities:
   Net income ...........................................  $6,765,000     $3,753,000
   Adjustments to reconcile net income to net cash 
      provided by(used in) operating activities:
      Depreciation and amortization......................     850,000        287,000
      Provision for doubtful accounts....................     923,000        340,000
      Minority interest in income of subsidiary..........      78,000             --
   Changes in assets and liabilities:
      Accounts receivable................................  (5,500,000)    (5,988,000)
      Unbilled services..................................  (6,281,000)    (5,111,000)
      Other current assets...............................  (1,231,000)       (99,000)
      Other assets.......................................    (609,000)       (68,000)
      Accounts payable...................................   1,961,000      1,207,000
      Accrued payroll and related taxes..................   3,850,000        782,000
      Accrued expenses and other liabilities.............     174,000       (161,000)
      Income taxes payable...............................     216,000        374,000
                                                           ----------     ----------
          Net cash provided by (used in) operating
           activities....................................   1,196,000     (4,684,000)
                                                           ----------     ----------


Cash flows from investing activities:
   Purchase of equipment.................................  (5,013,000)    (2,234,000)
                                                           ----------     ----------

Cash flows from financing activities:
   Proceeds from issuance of common stock, net of
    issuance costs.......................................          --      9,900,000
   Proceeds from the exercise of stock options...........   1,319,000        721,000
   Principal payments under capital leases...............     (33,000)        (6,000)
                                                           ----------     ---------
          Net cash provided by financing activities......   1,286,000     10,615,000
                                                           ----------     ----------

   Effect of foreign currency exchange rate changes
      on cash............................................    (533,000)           --
                                                           ----------     ---------

          Net increase (decrease) in cash and cash
              equivalents................................  (3,064,000)     3,697,000
Cash and cash equivalents at beginning of period.........   8,503,000      7,479,000
                                                           ----------     ---------
Cash and cash equivalents at end of period...............  $5,439,000    $11,176,000
                                                           ==========    ===========
</TABLE>


          See accompanying notes to consolidated financial 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, 1998 and for the three and nine months  ended
September  30, 1998 and 1997 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, 1997,
which were included as part of the Company's Form 10-KSB.

     Management of the Company, after consultation with its auditors, determined
that the  acquisition  of CPI  Resources  Limited in May 1998,  in a transaction
accounted  for as a pooling  of  interests,  was not  material  to prior  period
consolidated  financial  statements and thus did not restate them. However, as a
result of a subsequent SEC staff  interpretation  of materiality,  management of
the  Company  has  elected  to  restate  prior  period  consolidated   financial
statements in accordance with pooling of interests accounting.  The consolidated
financial  statements for all periods presented in this amended report have been
restated to include  the results of  operations  and  financial  position of CPI
Resources Limited.

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

(2) EARNINGS PER SHARE

     In 1997, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial  Accounting  Standards  No. 128  "Earnings  per Share" ("SFAS 128")
which has  replaced  the  former  rules  for  earnings  per share  computations,
presentation and disclosure. Under the new standard, basic earnings per share is
computed by dividing  income  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.

     The  Company has adopted  SFAS 128 and,  as required by the  standard,  has
restated all prior period  earnings per share data.  The  Company's new earnings
per share amounts as calculated under SFAS 128 are not materially different from
those computed under the former accounting standard.



                                     - 5 -
<PAGE>
     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,
                                           -------------           -------------
                                         1998         1997        1998       1997
                                         ----         ----        ----       ----
<S>                                   <C>         <C>           <C>         <C>
Weighted average number of common
shares                                12,647,000  12,029,000    12,481,000  11,477,000

Common share equivalents of
outstanding stock options                510,000     669,000       497,000     449,000
                                      ----------  ----------    ----------  ----------

Weighted average number of common
shares assuming dilution              13,157,000  12,698,000    12,978,000  11,926,000
                                      ==========  ==========    ==========  ==========
</TABLE>


     Certain stock options  outstanding  at September 30, 1998 were not included
in the computations of earnings per share assuming dilution because the options'
exercise  prices were greater than the average  trading  price of the  Company's
common shares.

(3) NEW ACCOUNTING PRONOUNCEMENTS

     Effective  January 1, 1998, the Company  adopted the provisions of SFAS No.
130, "Reporting Comprehensive Income," which establishes standards for reporting
comprehensive income and its components.  In June 1997, the FASB issued SFAS No.
131,  "Disclosures  about  Segments of an Enterprise  and Related  Information,"
which establishes  revised  reporting and disclosure  requirements for operating
segments.  These standards increase financial reporting  disclosures and have no
impact on the Company's financial position or results from operations.

(4) ACQUISITIONS

     On May 7, 1998,  the Company  acquired  thirty  percent of the  outstanding
share capital of CPI  Consulting  Limited.  The  acquisition  of CPI  Consulting
Limited was accounted for utilizing purchase accounting.  The consideration paid
by the Company  included the issuance of 165,696 shares of the Company's  Common
Stock with a fair market value of $3.1  million,  and a future  liability to the
sellers  predicated  upon  operating  results for the balance of 1998,  which is
currently estimated at $1.2 million.  The excess of purchase price over the fair
value of the net assets acquired was attributed to intangible assets,  amounting
in the  aggregate  to  $4.5  million,  which  was  recorded  at the  time of the
purchase.

     On May 21, 1998, the Company acquired all of the outstanding  share capital
of CPI Resources Limited. The acquisition of CPI Resources Limited was accounted
for as a  pooling  of  interests.  Prior  year  results  have been  restated  in
accordance  with  pooling of interests  accounting.  As  consideration  for this
acquisition, the Company issued 371,000 shares of the Company's Common Stock. At
the time of the acquisition,  CPI Resources Limited owned seventy percent of the
outstanding  share capital of CPI Consulting  Limited.  In connection  with this
acquisition, the Company incurred one-time costs of $434,000.


                                     - 6 -
<PAGE>
(5) FOLLOW-ON PUBLIC OFFERING

     On July 2, 1997, the Company  consummated a follow-on  public offering (the
"Offering") of 1,000,000  shares of its Common Stock at a price to the public of
$9.50 per share.  On July 15, 1997 and as part of the  Offering,  an  additional
150,000  shares at a price to the public of $9.50 per share were issued and sold
by the Company to cover overallotments. The net proceeds to the Company from the
Offering, after underwriting discounts and commissions and other expenses of the
Offering, were approximately $9.9 million.

(6) STOCK RIGHTS

     In  October  1998 the  Company's  Board of  Directors  declared  a dividend
distribution of one Preferred Share Purchase Right for each outstanding share of
the Company's Common Stock.  These Rights will expire in November 2008 and trade
with the Company's Common Stock.  Such Rights are not presently  exercisable and
have no voting  power.  In the event a person or  affiliated  group of  persons,
acquires 20% or more, or makes a tender or exchange offer for 20% or more of the
Company's  Common  Stock,  the Rights  detach  from the Common  Stock and become
exercisable and entitle a holder to buy one one-hundredth  (1/100) of a share of
Preferred Stock at $100.00.

     If, after the Rights become exercisable, the Company is acquired or merged,
each Right will  entitle  its holder to  purchase  $200.00  market  value of the
surviving company's stock for $100.00,  based upon the current exercise price of
the Rights.  The Company may redeem the Rights, at its option, at $.01 per Right
prior to a public announcement that any person has acquired beneficial ownership
of at least  20% of the  Company's  Common  Stock.  These  Rights  are  designed
primarily to encourage  anyone  interested in acquiring the Company to negotiate
with the Board of Directors.



                                     - 7 -
<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  services,
including  enterprise-wide  business process  solutions,  internet  applications
services,  systems integration and custom software  development based on leading
technologies.  The Company has grown rapidly since 1994 when it made a strategic
decision  to  diversify  its  customer  base  by  expanding  the  scope  of  its
integration  and  development  services and to utilize SAP software as a primary
tool to implement  enterprise-wide  business  process  solutions.  In 1995,  the
Company became an SAP National  Implementation Partner and also began to utilize
Oracle  products  to  diversify  its  service  offerings.  In 1997,  the Company
achieved  National  Logo  Partner  status  with SAP.  In July 1997,  the Company
achieved  AcceleratedSAP  Partner Status with SAP by meeting certain performance
criteria  established  by SAP.  Also,  in 1997,  the  Company  began to  provide
implementation  services to PeopleSoft and Baan  licensees to further  diversify
its service  offerings.  In July 1997, the Company was awarded an implementation
partnership status by PeopleSoft.  In September 1997, the Company was awarded an
international  consulting partnership status by Baan. In June, 1998, the Company
also expanded its Oracle applications implementation services practice and added
upgrade  services to meet market demand of mid-size to large  companies that are
implementing or upgrading Oracle applications.

     The  Company  generates  revenue  from  professional  services  rendered to
customers.  Revenue is  recognized  as services  are  performed.  The  Company's
services   range  from  providing   customers   with  a  single   consultant  to
multi-personnel  full-scale projects. The Company provides these services to its
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. The
Company provides its services 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.  The Company generally
bills its customers semi-monthly for the services provided by its 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  services on certain  projects in which it, at the
request of the clients, offered a fixed price for its services, however, none of
these  projects are  currently  material to the  Company's  business,  financial
condition and results of  operations.  The Company  believes that, as it pursues
its  strategy  of making  turnkey  project  management  a larger  portion of its
business,  it will likely be required to offer fixed price projects to a greater
degree.  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 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.

                                     - 8 -
<PAGE>
   
     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,  1998 and the year  ended
December 31, 1997,  the  Company's  ten largest  customers  accounted for in the
aggregate  approximately  41% and 46% of its revenue,  respectively.  During the
nine months ended September 30, 1998, no customer accounted for more than 10% of
revenue.  During the year ended  December 31, 1997,  PricewaterhouseCoopers  LLP
(formerly Price Waterhouse LLP) accounted for more than 10% of revenue.  For the
nine months ended  September 30, 1998 and the year ended  December 31, 1997, 37%
and 32%,  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 nine months ended  September 30, 1998 and the
year ended December 31, 1997,  approximately 63% and 58%,  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,  1998 and the year  ended  December  31,  1997,  approximately  14% and 12%,
respectively,  of the Company's total revenue was derived from projects in which
the Company  implemented  software  developed by Oracle.  During the nine months
ended September 30, 1998, approximately 46% of the Company's revenue was derived
from engagements in which the Company had project  management  responsibilities,
compared to 28% during the year ended December 31, 1997.
    

     The Company's most significant cost is project  personnel  expenses,  which
consists 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 has been  shifting to such  higher-margin  turnkey
management  assignments and more complex  projects by leveraging its reputation,
existing capabilities, proprietary implementation methodology, development tools
and offshore development  capabilities with expanded sales and marketing efforts
and new service  offerings to develop turnkey project sales  opportunities  with
both new and existing  customers.  The Company's inability to continue towards a
shift to higher-margin turnkey management  assignments and more complex projects
may adversely impact the Company's future growth.

     Since  late 1994,  the  Company  has made  substantial  investments  in its
infrastructure in order to support its rapid growth.  For example,  in 1994, the
Company  established  and funded an Advanced  Development  Center (the "ADC") in
India,  and in 1995,  established  a sales  office in  Northern  California.  In
addition,  from 1994 to date,  the  Company  has  incurred  expenses  to develop
proprietary  development  tools and its proprietary  accelerated  implementation
methodology  and toolset.  Since 1995, the Company has also been  increasing its
sales force and its marketing,  finance, accounting and administrative staff, in
order to effectively manage its growth.

     The Company  currently  maintains sales and operations  offices in Chicago,
Detroit,  Foster City  (California),  Reston  (Virginia),  Edison (New  Jersey),
Dallas, Atlanta, Phoenix, Boston, Miami and Washington,  D.C. In addition to the
ADC and sales  offices in India,  the  Company  also has  offices in  Australia,
Denmark, Japan, New Zealand, Singapore and the United  Kingdom.  The


                                     - 9 -
<PAGE>
Company leases its headquarters in Edison,  New Jersey,  totaling  approximately
48,475 square feet. Such lease has an initial term of ten (10) years, commencing
in September  1998.  The Company is in the process of finalizing an agreement to
sublet the space used for its prior  headquarters  for the remainder of the term
of its sublease, which expires November 15, 1999.

     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
higher margin turnkey  management  assignments and more complex  projects and to
utilize its proprietary  implementation  methodology in an increasing  number of
projects.  Such  forward-looking  statements  include  risks and  uncertainties,
including,  but not limited to: (i) 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) seasonal  patterns of hardware
and  software  capital  spending  by  customers,   (b)  information   technology
outsourcing trends, (c) the timing, size and stage of projects,  (d) new service
introductions  by the Company or its  competitors  and the timing of new product
introductions by the Company's ERP partners, (e) levels of market acceptance for
the  Company's  services,  (f) general  economic  conditions,  (g) the hiring of
additional  staff and (h) fixed price  contracts;  (ii) changes in the Company's
billing and employee  utilization  rates;  (iii) 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 and, (d) to maintain  project
quality,  particularly if the size and scope of the Company's projects increase;
(iv) the Company's ability to maintain an effective  internal control structure;
(v) the Company's limited operating history within its current line of business;
(vi) the Company's reliance on a continued relationship with SAP America and the
Company's  present  status as a SAP National Logo  Partner;  (vii) the Company's
substantial  reliance on key  customers  and large  projects;  (viii) the highly
competitive nature of the markets for the Company's services; (ix) the Company's
ability  to   successfully   address  the  continuing   changes  in  information
technology,  evolving industry  standards and changing  customer  objectives and
preferences;  (x) the Company's  reliance on the  continued  services of its key
executive officers and leading technical  personnel;  (xi) the Company's ability
to attract and retain a  sufficient  number of highly  skilled  employees in the
future;  (xii) the progress the Company may have at  continuing to diversify its
offerings,  including growth in its Oracle, Baan and PeopleSoft services; (xiii)
uncertainties  resulting  from  pending  litigation  matters and from  potential
administrative  and  regulatory  immigration  and tax  law  matters;  (xiv)  the
Company's  ability to protect its intellectual  property  rights;  and (xv) Year
2000 compliance of vendors' products and related issues, including impact of the
Year 2000 problem on customer buying patterns.  The Company's actual results may
differ materially from the results disclosed in such forward-looking statements.



                                     - 10 -
<PAGE>
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,
                                     ------------------------- ------------------------
                                        1998         1997         1998         1997
                                        ----         ----         ----         ----
<S>                                     <C>          <C>          <C>          <C>   
Revenue.............................    100.0%       100.0%       100.0%       100.0%
Cost of sales.......................     64.0         67.0         64.5         69.5
                                        -----       ------        -----        -----
   Gross profit.....................     36.0         33.0         35.5         30.5
Selling, general and administrative
   expenses.........................     26.0         22.5         25.5         21.1
Acquisition expenses................      0.0          0.0          0.4          0.0
                                        -----       ------        -----        -----
   Operating income.................     10.0         10.5          9.6          9.4
Other income........................      0.5          0.5          0.2          0.3
                                        -----       ------        -----        -----
Income before provision for income
   taxes............................     10.5         11.0          9.8          9.7
Provision for income taxes..........      3.2          4.0          2.9          3.6
                                        -----       ------        -----        -----
Net income..........................      7.3%         7.0%         6.9%         6.1%
                                        =====       ======        =====        =====
</TABLE>
    

                THREE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO
                      THREE MONTHS ENDED SEPTEMBER 30, 1997

   
     Revenue. Revenue increased by 51%, or $12.1 million, from $23.7 million
during the three months ended  September 30, 1997,  to $35.8 million  during the
three months ended September 30, 1998.  This increase is attributable  primarily
to increased  demand for the  Company's  SAP and  Oracle-related  Implementation
Consulting  Services,  as well as the Company's  systems  integration and custom
software development services.

     Gross profit.  The Company's cost of sales  includes  primarily the cost of
salaries to consultants  and related  employee  benefits and payroll taxes.  The
Company's  cost of sales  increased by 44%, or $7.0 million,  from $15.9 million
during the three months ended  September  30, 1997 to $22.9  million  during the
three  months  ended  September  30,  1998.  The  increase  was due to increased
personnel costs  resulting from the hiring of additional  consultants to support
the increase in demand for the Company's  services.  The Company's  gross profit
increased by 65%, or $5.1  million,  from $7.8  million  during the three months
ended  September  30,  1997 to $12.9  million  during  the  three  months  ended
September 30, 1998.  Gross profit margin  increased from 33.0% of revenue during
the three months ended  September 30, 1997 to 36.0% of revenue  during the three
months ended  September  30, 1998.  The increase in such gross profit margin was
primarily  attributable  to  both  the  expanded  utilization  of the  Company's
offshore  development  facility in India,  and the  increase  in  implementation
service  projects  where the Company has  project  management  responsibilities,
which  typically  carry  higher  gross  margins  than those in which the Company
provides supplemental staffing for client managed projects.

     Selling,   general  and  administrative   expenses  Selling,   general  and
administrative  expenses  increased by 74%, or $4.0  million,  from $5.3 million
during the three months  ended  September  30, 1997 to $9.3  million  during the
three months ended  September 30, 1998, and increased as a percentage of revenue
from 22.4% to 26.0%. The increases in such expenses in absolute dollars and as a
percentage of revenue were due primarily to the increase in salaries and related
benefits,
    

                                     - 11 -
<PAGE>
   
reflecting  headcount  increases in the Company's sales force and its marketing,
finance,  accounting and administrative staff, in order to manage its growth. In
addition,  the Company experienced  increases in sales and management recruiting
costs,  occupancy costs as additional  offices were opened in the United States,
support services and the provision for doubtful accounts.
    

     Other  income.  Interest  income has been earned on interest  bearing  cash
accounts and short-term  investments.  In accordance with investment  guidelines
approved by the Company's  Board of Directors,  cash balances in excess of those
required to fund  operations  have been  invested in  short-term  U.S.  Treasury
securities and commercial paper with a credit rating no lower than A1/P1.

   
     Provision for income taxes. The Company's  effective tax rate was 30.5% and
36.6% for the three months ended September 30, 1998 and 1997,  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.
For the three  months  ended  September  30,  1998,  the tax  holiday  favorably
impacted the Company's  effective tax rate by approximately 9%, while the effect
was not significant in the three months ended September 30, 1997.
    


                NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO
                      NINE MONTHS ENDED SEPTEMBER 30, 1997

   
     Revenue.  Revenue  increased by 60%, or $36.8  million,  from $61.7 million
during the nine months ended September 30, 1997 to $98.5 million during the nine
months ended  September 30, 1998.  This increase was  attributable  primarily to
increased demand for the Company's implementation  consulting services and, to a
lesser extent,  to increased  demand for the Company's  systems  integration and
custom software development services.

     Gross  profit.  The  Company's  cost of sales  increased  by 48%,  or $20.7
million,  from $42.9 million during the nine months ended  September 30, 1997 to
$63.6 million during the nine months ended  September 30, 1998. The increase was
due to  increased  personnel  costs  resulting  from the  hiring  of  additional
consultants  to support the increase in demand for the Company's  services.  The
Company's  gross profit  increased by 86%, or $16.2 million,  from $18.8 million
during the nine months ended September 30, 1997 to $35.0 million during the nine
months ended  September 30, 1998.  Gross profit margin  increased  from 30.5% of
revenue  during the nine  months  ended  September  30, 1997 to 35.5% of revenue
during the nine months  ended  September  30,  1998.  The increase in such gross
profit margin was primarily attributable to both the expanded utilization of the
Company's  offshore   development   facility  in  India,  and  the  increase  in
implementation  service  projects  where  the  Company  has  project  management
responsibilities, which typically carry higher gross margins than those in which
the Company provides supplemental staffing for client managed projects.

     Selling,  general  and  administrative   expenses.   Selling,  general  and
administrative  expenses increased by 92%, or $12.1 million,  from $13.0 million
during the nine months ended September 30, 1997 to $25.1 million during the nine
months ended  September 30, 1998,  and increased as a percentage of revenue from
21.1% to 25.5% of revenue.  The increases in such  expenses in absolute  dollars
and as a percentage  of revenue  were due  primarily to the increase in salaries
and related  benefits,  reflecting  headcount  increases in the Company's  sales
force and its marketing,  finance, accounting and administrative staff, in order
to manage its growth. In
    

                                     - 12 -
<PAGE>
   
addition,  the Company experienced  increases in sales and management recruiting
costs,  occupancy costs as additional  offices were opened in the United States,
support services and the provision for doubtful accounts.
    

     Acquisition  expense.  During the nine months ended September 30, 1998, the
Company  incurred  costs of $434,000 in connection  with the  acquisition of CPI
Resources  Limited,  which was accounted  for as a pooling of  interests.  These
costs primarily consisted of professional fees associated with the acquisition.

     Other  income.  Interest  income has been earned on interest  bearing  cash
accounts and short-term  investments.  In accordance with investment  guidelines
approved by the Company's  Board of Directors,  cash balances in excess of those
required to fund  operations  have been  invested in  short-term  U.S.  Treasury
securities and commercial paper with a credit rating no lower than A1/P1.

   
     Provision for income taxes.  The  Company's  effective  income tax rate was
30.1%  and  37.3%  for the  nine  months  ended  September  30,  1998  and  1997
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.  For the nine months ended  September 30, 1998,  the tax holiday
favorably  impacted the Company's  effective tax rate by approximately 9%, while
the effect was not significant in the nine months ended September 30, 1997.
    

BACKLOG

     The Company  normally  enters into written  contracts with its customers at
the time it commences work on a project. These written contracts contain varying
terms  and  conditions  and  the  Company  does  not  generally  believe  it  is
appropriate  to  characterize  such written  contracts as creating  backlog.  In
addition, because these written contracts often provide that the arrangement can
be terminated with limited advance notice and without significant  penalty,  the
Company does not believe that projects in process at any one time are a reliable
indicator or measure of expected  future  revenue.  In the event that a customer
terminates  a project,  the  customer  remains  obligated to pay the Company for
services performed by it through the date of termination.

LIQUIDITY AND CAPITAL RESOURCES

     The Company funds its  operations  primarily  from cash flow generated from
operations,  and to a lesser  extent,  from  cash  balances  generated  from the
Company's initial and follow-on public offerings consummated in October 1996 and
July 1997, respectively.



                                     - 13 -
<PAGE>
   
     The Company had cash and cash  equivalents of $5.4 million at September 30,
1998, and $8.5 million at December 31, 1997. The Company had working  capital of
$30.6 million at September 30, 1998 and $29.3 million at December 31, 1997.

     Cash  provided by operating  activities  was $1.2  million  during the nine
months ended  September 30, 1998,  resulting  primarily  from net income of $6.8
million  for the nine  months  ended  September  30,  1998,  an increase of $5.8
million in accounts payable and accrued payroll,  offset by an increase of $11.8
million in accounts  receivable  and unbilled  services.  Cash used in operating
activities for the nine months ended September 30, 1997 was $4.7 million.

     The Company  invested  $5.0 million and $2.2 million in computer  equipment
and office  furniture  and fixtures  during the nine months ended  September 30,
1998 and 1997,  respectively.  The increase  reflects  purchases of computer and
telecommunication  equipment for consultants and administrative staff and office
furniture and fixtures related to the Company's new headquarters in Edison,  New
Jersey, and other new offices opened during 1998.
    

     In January  1997,  and as later  amended on August 18,  1997,  the  Company
entered into a two-year  credit  agreement with a bank (the "Bank").  The credit
facility with the Bank has two  components  comprised of (i) a revolving line of
credit pursuant to which the Company may borrow up to $7.5 million either at the
Bank's prime rate per annum or the EuroRate plus 2% (at the  Company's  option),
and (ii)  equipment term loans pursuant to which the Company may borrow up to an
aggregate  of  $350,000  (at the Bank's  prime rate plus 1/4 of 1% per annum) to
purchase  equipment.  The credit agreement  contains covenants which require the
Company to (i) maintain its working  capital during the year at no less than 90%
of the working capital at the end of the immediately  preceding  fiscal year and
at the end of each fiscal  year at no less than 105% of its  working  capital at
the end of the immediately preceding fiscal year; and (ii) maintain its tangible
net worth  during the year at no less than 95% of its  tangible net worth at the
end of the immediately  preceding fiscal year and at the end of each fiscal year
at no less  than  108%  of  tangible  net  worth  at the end of the  immediately
preceding  fiscal year. As of September  30, 1998,  the Company is in compliance
with all debt covenants.  The Company's  obligations  under the credit agreement
are  collateralized by substantially all of the Company's assets,  including its
accounts receivable and intellectual  property.  The Company's obligations under
the credit  facility are payable at the  expiration  of such facility on January
22, 1999. These terms are subject to the Company  maintaining an  unsubordinated
debt to tangible  net worth ratio of no greater  than one to one and an earnings
before  interest  and taxes to interest  expense  ratio of no less than three to
one.

     As of  September  30,  1998,  there were no amounts  outstanding  under the
revolving line of credit and no equipment term loans outstanding.

     On  October  22,  1998,  the  Company  announced  that  it had  executed  a
commitment  letter with PNC Bank for a three-year $30 million  revolving  credit
facility.  When  finalized,  such facility  will replace the  Company's  current
two-year  $7.5  million  credit  facility.  The  Company  expects  to close this
facility  in  November  1998.  There  can be no  assurance,  however,  that such
facility will be finalized in 1998, if at all.



                                     - 14 -
<PAGE>

     The Company believes that its available funds, together with current credit
arrangements and the cash flows expected to be generated from  operations,  will
be adequate to satisfy its current and planned  operations  through at least the
next twelve months.

YEAR 2000 COMPLIANCE

     Historically,  certain computer programs have been written using two digits
rather  than four to define  the  applicable  year,  which  could  result in the
computer  recognizing a date using "00" as the year 1900 rather than 2000.  This
in turn,  could  result in major  system  failures  or  miscalculations,  and is
generally  referred to as the "Year 2000 Problem".  The Company believes that it
has  sufficiently  assessed its state of readiness with respect to its Year 2000
compliance. Based on its assessment, the Company does not believe that Year 2000
compliance  will result in material  investments  by the  Company,  nor does the
Company  anticipate  that the Year 2000 Problem will have any adverse effects on
the business  operations or financial  performance  of the Company.  The Company
does not believe that it has any material exposure to the Year 2000 Problem with
respect to its own information systems.

     The  purchasing  patterns  of  customers  and  potential  customers  may be
affected by issues  associated with the Year 2000 Problem.  As companies  expend
significant  resources to correct  their current data storage  solutions,  these
expenditures  may result in reduced  funds to  purchase  products  or  undertake
projects  such as those offered by the Company.  There can be no assurance  that
the Year 2000 Problem, as it relates to customers, potential customers and other
third-parties,  will not  adversely  affect the  Company's  business,  operating
results and  financial  condition.  Conversely,  the Year 2000 Problem may cause
other  companies  to  accelerate  purchases,  thereby  causing  an  increase  in
short-term  demand  and a  consequent  decrease  in  long-term  demand  for  the
Company's products.

EUROPEAN MONETARY UNION (EMU)

     The euro is scheduled to be  introduced  on January 1, 1999,  at which time
the eleven  participating  EMU member  countries will establish 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.


                                     - 15 -
<PAGE>
PART II.    OTHER INFORMATION

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

      (a)   Exhibits.

                  27.1  Restated  Financial  Data  Schedule for the period ended
                        September 30, 1998.

                  27.2  Restated  Financial  Data  Schedule for the period ended
                        September 30, 1997.


      (b) Reports on Form 8-K.

                  No reports on Form 8-K were filed during the quarter for which
                  this report on Form 10-Q is filed.

                  Subsequent  to the  quarter  ended  September  30,  1998,  the
                  Company  filed,  on November 9, 1998, a Current Report on Form
                  8-K with the  Securities and Exchange  Commission  relating to
                  the Company's  adoption of a Shareholder Rights Plan. See Item
                  2, Changes in Securities and Use of Proceeds.



                                     - 16 -
<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:  March 26, 1999                     By:   /s/ Stephen A. Carns
                                             ----------------------------------
                                          Stephen A. Carns,
                                          President and Chief Executive
                                    Officer
                                          (Principal Executive Officer)


DATE:  March 26, 1999                     By:   /s/ Gerard E. Dorsey
                                             ----------------------------------
                                          Gerard E. Dorsey,
                                          Senior Vice President-Finance and
                                          Chief Financial Officer
                                          (Principal Financial and Accounting
                                          Officer)