UNITED STATESSECURITIES AND EXCHANGE COMMISSION Washington, DC 20549

FORM 10-Q

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

For the quarterly period
ended September 30, 2009

Commission file number 0-20943
INTELLIGROUP, INC.

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

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

|**(646) 810-7400**                                  
|----------------------------------------------------
|                                                    
|(Registrants Telephone Number, Including Area Code)

Indicate by check mark whether the
registrant: (1) has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.

Yes x  No o

Indicate by check mark whether the registrant has
submitted electronically and posted on its corporate website, if any, every
interactive data file required to be submitted and posted pursuant to Rule 405
of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or
for such shorter period that the registrant was required to submit and post such
files).  oYesoNo

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

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

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

Yes o  No x

Indicate the number of shares
outstanding of each of the registrants classes of common stock, as of Oct
31, 2009:

|Class                        | Number of
      Shares
|---------------------------- | ----------------------
|Common Stock, $.01 par value | 41,073,571            

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TABLE OF CONTENTS

|                              |                                                                                                                                                                        |  | Page
|----------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|PART I. FINANCIAL INFORMATION |                                                                                                                                                                        | 
|                              |                                                                                                                                                                        | 
|Item 1.                       | Financial statements                                                                                                                                                   |  |     
|                              |                                                                                                                                                                        |  |     
|                              | Condensed consolidated balance sheets as of September 30, 2009
      (unaudited) and December 31, 2008                                                                 |  | 4   
|                              |                                                                                                                                                                        |  |     
|                              | Condensed consolidated statements of operations and comprehensive
      income for the three and nine month period ended September 30, 2009 and
      2008 (unaudited) |  | 5   
|                              |                                                                                                                                                                        |  |     
|                              | Consolidated statements of cash flows for the nine month period
      ended September 30, 2009 and 2008                                                                |  | 6   
|                              |                                                                                                                                                                        |  |     
|                              | Notes to condensed consolidated financial statements                                                                                                                   |  | 7   
|                              |                                                                                                                                                                        |  |     
|Item 2.                       | Managements discussion and analysis of financial condition and
      results of operations                                                                            |  | 22  
|                              |                                                                                                                                                                        |  |     
|Item 3.                       | Quantitative and qualitative disclosures about market
risk                                                                                                             |  | 37  
|                              |                                                                                                                                                                        |  |     
|Item 4.                       | Controls and procedures                                                                                                                                                |  | 37  
|                              |                                                                                                                                                                        |  |     
|PART II. OTHER INFORMATION    |                                                                                                                                                                        | 
|                              |                                                                                                                                                                        | 
|Item 1.                       | Legal proceedings                                                                                                                                                      |  | 38  
|                              |                                                                                                                                                                        |  |     
|Item 1a.                      | Risk factors                                                                                                                                                           |  | 38  
|                              |                                                                                                                                                                        |  |     
|Item 2                        | Unregistered sales of equity securities and use of
    proceeds                                                                                                        |  | 38  
|                              |                                                                                                                                                                        |  |     
|Item 4.                       | Submission of matters to a vote of security holders                                                                                                                    |  | 39  
|                              |                                                                                                                                                                        |  |     
|Item 6.                       | Exhibits                                                                                                                                                               |  | 39  
|                              |                                                                                                                                                                        |  |     
|Signatures                    |                                                                                                                                                                        |  | 41  

2



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FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q
contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
Forward-looking statements include, among other things, business strategy and
expectations concerning industry conditions, market position, future operations,
margins, profitability, liquidity and capital resources. Forward-looking
statements generally can be identified by the use of terminology such as may,
will, expect, intend, estimate, anticipate or believe or similar
expressions or the negatives thereof. These expectations are based on
managements assumptions and current beliefs based on currently available
information. Although the Company believes that the expectations reflected in
such statements are reasonable, it can give no assurance that such expectations
will be correct. You are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this quarterly
report on Form 10-Q and the Company does not have any obligation to update the
forward looking statements. The Companys operations are subject to a number of
uncertainties, risks and other influences, many of which are outside its
control, and any one of which, or a combination of which, could cause its actual
results of operations to differ materially from the forward-looking statements.
Important factors that could cause actual results to differ materially from its
expectations are disclosed in Part I, Item 2, Managements Discussion and
Analysis of Financial Condition and Results of Operations, and listed under
Item 1A Risk Factors in our annual report on Form 10-K/A for the year ended
December 31, 2008 and elsewhere in this quarterly report on Form 10-Q.

3



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INTELLIGROUP,
INC.CONDENSED CONSOLIDATED BALANCE
SHEETSAS OF SEPTEMBER 30, 2009 AND DECEMBER 31, 2008(In thousands except par
value)

|                                                                                           |  | September 30 |         | December 31
|------------------------------------------------------------------------------------------ |  | ------------ | ------- | -----------
|                                                                                           |  | 2009         |         | 2008       
|ASSETS                                                                                     |  | (Unaudited)  |         |            
|CURRENT ASSETS                                                                             |  |              |         |            
|Cash and cash
      equivalents                                                            |  | $            | 21,004  |            
|Short-term
    investments                                                                 |  |              | 1,852   |            
|                                                                                          
|Accounts receivable,
      less allowance for doubtful accounts of $2,162                  |  |              |         |            
|and $1,996 at September
      30, 2009 and December 31, 2008, respectively                 |  |              | 21,795  |            
|Unbilled services, less
      allowance for doubtful accounts of $46 and $20               |  |              |         |            
|at September 30, 2009 and
      December 31, 2008, respectively                            |  |              | 4,923   |            
|Deferred tax asset, current
      portion                                                  |  |              | 623     |            
|Prepaid expenses and prepaid
      taxes, less allowance for doubtful accounts of $0       |  |              |         |            
|and $130 at September 30, 2009
      and December 31, 2008 respectively                    |  |              | 642     |            
|Other current assets                                                                       |  |              | 659     |            
|Total
      current assets                                                                 |  |              | 51,498  |            
|Property and equipment, net                                                                |  |              | 3,346   |            
|Goodwill and
      intangibles                                                             |  |              | 1,925   |            
|Restricted cash and investments                                                            |  |              | 2,475   |            
|Prepaid taxes -
      non-adjustable, less allowance for doubtful accounts of $101 and     |  |              |         |            
|$95 at
      September 30, 2009 and December 31, 2008, respectively                        |  |              | 887     |            
|Deferred taxes and other assets                                                            |  |              | 2,704   |            
|Total
      Assets                                                                         |  | $            | 62,835  |            
|                                                                                          
|LIABILITIES AND SHAREHOLDERS' EQUITY                                                       |  |              |         |            
|CURRENT
      LIABILITIES                                                                  |  |              |         |            
|Line of credit
      borrowings                                                            |  | $            | 125     |            
|Accounts payable                                                                           |  |              | 1,502   |            
|Liability on derivative
      instruments                                                  |  |              | 1,057   |            
|Accrued payroll and related
      taxes                                                    |  |              | 9,664   |            
|Accrued expenses and other
      current liabilities                                       |  |              | 4,035   |            
|Deferred revenue, current
      portion                                                    |  |              | 1,583   |            
|Tax payable, net of prepaid
      taxes and allowance for doubtful accounts of             |  |              |         |            
|$367 and $0 at September 30,
      2009 and December 31, 2008 respectively                 |  |              | 860     |            
|Capital lease and deferred
      rent, current portion                                     |  |              | 608     |            
|Total current liabilities                                                                  |  |              | 19,434  |            
|Obligations
      under capital lease, net of current portion                              |  |              | 216     |            
|Deferred revenue, net of current portion                                                   |  |              | 360     |            
|Other
      long-term liabilities                                                          |  |              | 984     |            
|Total Liabilities                                                                          |  |              | 20,994  |            
|                                                                                          
|SHAREHOLDERS' EQUITY                                                                       |  |              |         |            
|Preferred stock, $.01 par
      value, 5,000 shares authorized, none issued or outstanding |  |              |        |            
|Common stock, $.01 par value,
      65,000 shares authorized                               |  |              |         |            
|at September 30, 2009 and
      December 31, 2008 and 41,074 and 42,114 shares             |  |              |         |            
|issued and outstanding at
      September 30, 2009 and December 31, 2008, respectively     |  |              | 411     |            
|Additional paid-in
      capital                                                           |  |              | 70,912  |            
|Accumulated deficit                                                                        |  |              | (26,559 | )          
|Accumulated other
      comprehensive loss                                                 |  |              | (2,923  | )          
|                                                                                           |  |              |         |            
|**Total shareholders equity**                                                             |  |              | 41,841  |            
|                                                                                           |  |              |         |            
|**Total liabilities and shareholders equity**                                             |  | $            | 62,835  |            

See accompanying notes

4

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

|                                                    |  | NINE MONTHS PERIOD ENDED |        | THREE MONTHS PERIOD ENDED
|--------------------------------------------------- |  | ------------------------ | ------ | -------------------------
|                                                    |  | SEPTEMBER 30             |        | SEPTEMBER 30             
|                                                    |  | 2009                     |        | 2008                     
|Revenue                                             |  | $                        | 93,559 |                          
|Cost of
    revenue                                 |  |                          | 62,261 |                          
|Gross profit                                        |  |                          | 31,298 |                          
|                                                   
|Selling, general and administrative expenses        |  |                          | 21,100 |                          
|Depreciation and
      amortization                 |  |                          | 1,906  |                          
|Total operating
    expenses                        |  |                          | 23,006 |                          
|                                                   
|Operating income                                    |  |                          | 8,292  |                          
|                                                   
|Interest income                                     |  |                          | 100    |                          
|Interest
    expense                                |  |                          | (57    | )                        
|Foreign
      currency transaction gain (loss), net |  |                          | 141    |                          
|Other income (expense),
      net                   |  |                          | 693    |                          
|                                                   
|Income
      before income taxes                    |  |                          | 9,169  |                          
|Provision for income
      taxes                    |  |                          | 1,629  |                          
|Net
      income                                    |  | $                        | 7,540  |                          
|                                                   
|Basic
      net income per share                    |  | $                        | 0.18   |                          
|Diluted net income per
      share                  |  | $                        | 0.18   |                          
|                                                   
|Weighted average no. of common shares outstanding   |  |                          |        |                          
|- Basic                                             |  |                          | 41,451 |                          
|- Diluted                                           |  |                          | 41,591 |                          
|                                                   
|Comprehensive income                                |  |                          |        |                          
|Net income                                          |  | $                        | 7,540  |                          
|Other comprehensive income
      (loss)             |  |                          |        |                          
|Currency translation adjustments                    |  |                          | 445    |                          
|                                                   
|Comprehensive income                                |  | $                        | 7,985  |                          

See accompanying notes.

5

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INTELLIGROUP,
INC.CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWSFOR NINE MONTH ENDED SEPTEMBER 30, 2009 AND 2008(USD in
thousands)

|                                                               | NINE MONTHS PERIOD ENDED
|-------------------------------------------------------------- | ------------------------
|                                                               | SEP 30,                 
|                                                               | 2009                    
|                                                               | (Unaudited)             
|Cash
      flows from operating activities:                    |                         
|Net income                                                     | $                       
|Adjustments to reconcile net income to net                     |                         
|Cash provided by operating
      activities:                   |                         
|Depreciation and
      amortization                            |                         
|Provision for doubtful
      accounts and advances             |                         
|Stock compensation
      expense                               |                         
|Profit on sale of
      investment                             |                         
|Unrealized interest on
      investment                        |                         
|Unrealized gain on
      investments                           |                         
|Loss on sale of fixed
      assets                             |                         
|Unrealized exchange
      (gain)/loss                          |                         
|Deferred taxes                                                 |                         
|Changes in operating
      assets and liabilities:             |                         
|Accounts receivable                                            |                         
|Unbilled services                                              |                         
|Prepaid taxes                                                  |                         
|Prepaid expenses and other
      current assets                |                         
|Other assets                                                   |                         
|Restricted cash and
      investments                          |                         
|Derivative liability                                           |                         
|Accounts payable                                               |                         
|Accrued payroll and related
      taxes                        |                         
|Accrued expenses and other
      current liabilities           |                         
|Deferred revenue, Current
      portion                        |                         
|Deferred revenue, net of
      current portion                 |                         
|Income taxes payable                                           |                         
|Other long-term
      liabilities                              |                         
|Net
      cash provided by operating activities                | $                       
|                                                              
|Cash
      flows from investing activities:                    |                         
|Purchase of property and
      equipment                       | $                       
|Proceeds from sale of
      equipment                          |                         
|Purchases of
    investments                                   |                         
|Proceeds from sale of
      investments                        |                         
|Net cash used in
      investing activities                    | $                       
|                                                              
|Cash
      flows from financing activities:                    |                         
|Principal payments under
      capital leases                  | $                       
|Stock repurchase                                               |                         
|Proceeds from exercise of
      stock options                  |                         
|Net change in line of credit
      borrowings                  |                         
|Net cash used in
      financing activities                    | $                       
|                                                              
|Effect
      of foreign currency exchange rate changes on cash | $                       
|                                                              
|Net
      increase (decrease) in cash and cash equivalents     |                         
|Cash and cash
      equivalents - beginning of year            | $                       
|Cash
      and cash equivalents - end of the period            | $                       

See accompanying notes

6

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INTELLIGROUP, INC.NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED)September 30, 2009 AND 2008

NOTE 1- BASIS OF PRESENTATION

The
condensed consolidated financial statements and accompanying financial
information as of September 30, 2009 and for the three and nine month period
ended September 30, 2009 and 2008 are unaudited and, in the opinion of
management, include all adjustments (consisting only of normal recurring
adjustments) which the Company considers necessary for a fair presentation of
the financial position of the Company at such dates and the operating results
and cash flows for those periods. The unaudited condensed consolidated financial
statements included herein have been prepared in accordance with accounting
principles generally accepted in the United States of America and the
instructions of Form 10-Q and Rule 10-01 of Regulation S-X. Pursuant to
accounting requirements of the Securities and Exchange Commission applicable to
quarterly reports on Form 10-Q, the accompanying unaudited condensed
consolidated financial statements and these notes do not include all disclosures
required by accounting principles generally accepted in the United States of
America for audited financial statements. Accordingly, these statements should
be read in conjunction with the accounting policies and notes to consolidated
financial statements included in the Companys consolidated financial statements
filed on Form 10-K/A for the year ended December 31, 2008.

The amounts for the December 31,
2008 balance sheet have been extracted from the audited consolidated financial
statements included in our annual report on Form 10-K/A for the year ended
December 31, 2008.

The results of the Companys
operations for the three and nine month period ended September 30, 2009 are not
necessarily indicative of the results of operations to be expected for the full
year ending December 31, 2009.

Certain prior period amounts have
been reclassified in the consolidated financial statements to conform to the
2009 presentation. Prepaid taxes which represent taxes paid under protest to the
tax authorities in India (please refer to Income Taxes under Note 2 below on
Summary of Significant Accounting Policies), previously included as current
assets, have now been classified under non-current assets since the
recoverability of such prepayments is not determinable.

NOTE 2- SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES

Cash and Cash
Equivalents

The
Company considers all highly liquid debt instruments and other short-term
investments with a maturity of three months or less, when purchased, to be cash
equivalents.

The
Company maintains cash and cash equivalent balances at several financial
institutions that are insured by the Federal Deposit Insurance Corporation up to
$250,000. The Company maintains cash balances in excess of insured amounts.

The Company did not have any cash
equivalents as at September 30, 2009 and December 31, 2008.

Revenue Recognition and Allowance
for Doubtful Accounts

The
Company generates revenue from professional services rendered to customers.
Revenue is recognized under the Companys contracts generally when persuasive
evidence of an arrangement exists, the sales price is fixed or determinable and
collection of amounts billed is reasonably assured. The majority of our revenue
is generated under time-and-material contracts whereby costs and revenue are
recognized as services are performed, with the corresponding cost of providing
those services reflected as cost of revenue. The majority of customers are
billed on an hourly or daily basis whereby actual time is charged directly to
the customer. Such method is expected to result in reasonably consistent profit
margins over the contract term.

7

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INTELLIGROUP, INC.NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED)September 30, 2009 AND 2008

NOTE 2- SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)

The
Company also derives a portion of our revenue from fixed-price, fixed-time
contracts. Revenue generated from most fixed-price contracts, including most
application management and support contracts, is recognized ratably over the
contract term. Certain fixed price contracts are for implementation services,
including design and modification, for which specifications are provided by the
customer. The scope of the work is usually defined in terms of overall
deliverables and the revenue for such work is ultimately earned by achieving the
deliverables. We consider the performance of service towards the planned
deliverable as partial execution of the deliverable and hence the revenue
generated from such fixed-price contracts is recognized using the percentage of
completion (POC) method. The POC method recognizes the legal and economic
results of contract performance on a timely basis. This method of accounting
relies on estimates of total expected contract revenues and costs. Where the
contracts involve only implementation services, the Company recognizes revenue
based on a proportional performance method. The pattern of performance on these
contracts closely resembles the time spent by our employees and therefore
efforts-expended, measured based on the cost of the employees time, is used as
a measure for the proportion of services rendered in relation to the total
services expected to be rendered.

The use
of the POC method or the proportional performance method requires significant
judgment relative to estimating the number of hours or days required to complete
the contracted scope of work, including assumptions and estimates relative to
the length of time to complete the project and the nature and complexity of the
work to be performed. Our project delivery and business unit finance personnel
continually review labor hours incurred and estimated total labor hours, which
may result in revisions to the amount of recognized revenue for the contract.
Changes in estimates are accounted for in the period of change. If we do not
accurately estimate the resources required or the scope of work to be performed
for a contract or if we do not manage the project properly within the planned
time period, then a loss may have to be recognized on the contract. Losses are
recorded in the period when they become known, and estimated through the
completion of the contract.

We
occasionally derive revenue from projects involving multiple revenue-generating
activities. Accordingly, the revenue from such projects is accounted for in
accordance with Accounting Standards Codification (ASC) 605-25 (Previously
Emerging Issues Task Force of the Financial Accounting Standards Board (FASB)
Issue No. 00-21), Accounting for Revenue Arrangements with Multiple
Deliverables. If a contract involves the provision of multiple service
elements, total estimated contract revenue is allocated to each element based on
the relative fair value of each element. The amount of revenue allocated to each
element is limited to the amount that is not contingent upon the delivery of
another element in the future. Revenue for each element is then recognized as
described above depending upon whether the contract is a time-and-materials
contract or a fixed-price, fixed-time contract.

Any
estimation process, including that used in preparing contract accounting models,
involves inherent risk. We reduce the inherent risk relating to revenue and cost
estimates in proportional performance models through approval and monitoring
processes. Risks relating to service delivery, usage, productivity and other
factors are considered in the estimation process.

The
Company accrues for revenue and receivables for services rendered between the
last billing date and the balance sheet date. Unbilled services as of September
30, 2009 and December 31, 2008 represent services provided through the nine
month period ended September 30, 2009 and the year ended December 31, 2008,
respectively, which is billed subsequent to the balance sheet date. All such
amounts are anticipated to be collected in the following year.

Reimbursements of out-of-pocket expenses received from clients have been
included as part of revenues in accordance with ASC No. 605-45 (previously EITF
01-14), Income Statement Characterization of Reimbursements Received for
Out-of-Pocket Expenses Incurred.

8

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INTELLIGROUP,
INC.NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED)September 30, 2009 AND 2008

NOTE 2- SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)

We
establish billing terms at the time project deliverables are agreed, and we
continually monitor timely payments from customers and assess collection issues.
We maintain allowances for doubtful accounts for estimated losses resulting from
the inability of our clients to make required payments. We base our estimates on
historical collection and write-off experience, current trends, credit policy,
detailed analysis of specific client situations and percentage of accounts
receivable by aging category.

Earnings per Common Share

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

For the nine month period ended
September 30, 2009 and 2008, respectively, the weighted average number of shares
used in calculating diluted earnings per share includes stock options for
139,973 and 279,248 respectively. For the three month period ended September 30,
2009 and 2008, respectively, the weighted average number of shares used in
calculating diluted earnings per share includes stock options for 497,942 and
420,355 respectively.

For the nine month period ended
September 30, 2009 and 2008, respectively, options to purchase 1,608,407 and
1,291,054 shares of common stock were not included in the computation of diluted
earnings per share because inclusion would have been anti-dilutive. For the
three month period ended September 30, 2009 and 2008, respectively, options to
purchase, 1,141,584 and 335,138 shares of common stock were not included in the
computation of diluted earnings per share because inclusion would have been
anti-dilutive.

As explained in Note 6 below, the
Company engaged in a share repurchase program through which it repurchased
1,197,881 shares as of September 30, 2009.

Income Taxes

The
Company records tax expense/benefit based upon the taxable income/loss recorded
in each tax jurisdiction. The Company recorded an income tax expense of $0.5
million and $0.5 million on a pretax income of $4.1 million and $3.2 million for
the three month period ended September 30, 2009 and 2008, respectively and an
income tax expense of $1.6 million and $1.1 million on a pretax income of $9.2
million and $6.8 million for the nine month period ended September 30, 2009 and
2008, respectively.

The
effective tax rate has decreased to a tax provision of 12% during the three
month period ended September 30, 2009 from a tax provision of 14% during the
three month period ended September 30, 2008. The effective tax rate has
increased to a tax provision of 18% during the nine month period ended September
30, 2009 from a tax provision of 16% during the nine month period ended
September 30, 2008. Changes in the effective rate of taxes are due to the
changes in the geographic distribution of our income and changes in non taxable
income. The difference between the income tax rates for the 2009 and 2008
periods and the statutory rate is primarily due to the existence of carried
forward net operating losses in the U.S. locations and earnings taxed in
countries that have rates lower than the United States.

The
Companys India subsidiary received tax assessments for the fiscal years ended
March 31, 1998 through 2003 and fiscal year ended March 31, 2005, challenging
the tax exemptions of certain revenue earned and disallowing certain expenses.
The Company has deposited additional tax of INR 41.1 million (or approximately
$0.9 million) under protest, net of allowance of $0.1 million, as at September
30, 2009 consequent to the above tax assessments.

9

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INTELLIGROUP, INC.NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED)September 30, 2009 AND 2008

NOTE 2- SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)

The
Companys India subsidiary received tax assessments for the fiscal years ended
March 31, 1998 to 2003 demanding an additional tax of INR 30.1 million (or
approximately $0.6 million). The amounts were deposited by the Company under
protest. The Company is under litigation in connection with these assessments
and received a favorable judgment in 2007 for the fiscal years ended March 31,
1998 through March 31, 2000. The judgment refunded approximately $0.2 million of
the amount deposited for the year ended March 31, 1998, while $0.2 million is
pending to be received from the tax authorities for the year ended March 31,
1999. While processing the above refund an amount of INR 2.5 million (or
approximately $0.1 million) for the fiscal year ended March 31, 2000 had been
deducted by the tax authorities challenging certain tax exemptions that the
Company had previously been permitted to take. The Company is under litigation
against this order and does not expect a favorable decision. This has been fully
reserved for as of September 30, 2009.

During
the three month period ended June 30, 2009, the Company deposited an amount of
INR 2.8 million (or approximately $0.1 million) under protest against the order
passed by the tax authorities challenging certain tax exemptions, the Company
was previously permitted to take for the fiscal year ended March 31, 2001.
Further, for the fiscal year ended March 31, 2005, an amount of INR 20.4 million
(or approximately $0.4 million) had been deposited by the Company under protest,
during the three month period ended March 31, 2009, against an assessment order
passed by the tax authorities, challenging the transfer pricing methodology
followed by the Company and non submission of evidence in support of foreign
inward remittance. The Company has not recorded a reserve on the additional tax
paid under protest as it believes its tax position will most likely be sustained
based on independent merits.

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

Goodwill and Intangibles

The
Company does not amortize goodwill but instead tests goodwill at the reporting
unit level for impairment at least annually or as circumstances warrant. If
impairment is indicated, a write down to fair value (normally measured
discounting estimated cash flows) is recorded. Other intangibles represent
customer relationships which are amortized on a straight line basis over their
estimated useful lives.

Pension Plan Liability

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

10

---

INTELLIGROUP,
INC.NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED)September 30, 2009 AND 2008

NOTE 2- SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)

The
discount rate enables the Company to state expected future cash flows at a
present value on the measurement date. The discount rate used is equal to the
yield on high quality fixed income investments in India at the measurement date.
The expected rate of return on plan assets is estimated based on available
market information, Indian law which regulates such investments and historical
returns. The measurement date for these employee retirement benefits coincides
with reporting date of the financial statements. The Company adopted the
recognition and disclosure requirements of ASC 715-20, Employers Accounting
for Defined Benefit Pension and Other Postretirement Plans (Previously SFAS No.
158An Amendment of FASB No. 87, 88, 106 and 132(R)) as of December 31, 2006 and
the measurement date requirement as of January 1, 2008. The implementation of
this standard did not have a material impact on its consolidated financial
statements.

Share-Based Compensation
Plans

The Companys share-based
compensation plans are described in Note 6. The Company adopted the provisions
of ASC 718 (previously SFAS No. 123R) on January 1, 2006, using the modified
prospective transition method.

There were no share-based payment
awards granted during the three and nine month period ended September 30, 2009.
The Company recognizes compensation expense for all share-based payment awards
based on the grant date fair value estimated in accordance with the provisions
of ASC 718.

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

- Expected volatility  the Company
  estimates the volatility of common stock at the date of grant using a
  combination of unadjusted historical volatility, and historical volatility
  adjusted for periods of unusual stock price activity.
- Expected term  the Company estimates
  the expected term of options granted based on a combination of vesting
  schedules, life of the option, historical experience and in cases where the
  Company does not have significant historical experience, the simplified method
  of determining expected term outlined in ASC 718 (previously Staff Accounting
  Bulletin(SAB) 107 and SAB 110) is used.
- Risk-free interest rate  the Company
  estimates the risk-free interest rate using the U.S. Treasury yield curve in
  effect at the time of grant for periods equal to the expected life of the
  options.
- Dividends  the Company uses an
  expected dividend yield of zero since it has never declared or paid any
  dividends on its capital stock. The Company intends to retain any earnings to
  fund future growth and the operation of its business, and, therefore does not
  anticipate paying any cash dividends in the foreseeable
future.

Additionally, the Company estimates forfeitures at the time of grant and
revises those estimates in subsequent periods if actual forfeitures differ from
those estimates. It uses a combination of historical data, demographic
characteristics and other factors to estimate pre-vesting option forfeitures and
record share-based compensation expense only for those awards that are expected
to vest. ASC 718 requires the cash flows resulting from the tax benefits for tax
deductions in excess of the compensation expense recorded for those options to
be classified as financing cash flows. The Company issued 78,062 and 11,225
shares upon exercise of options during the three and nine month period ended
September 30, 2009 and 2008, respectively.

11

---

INTELLIGROUP,
INC.NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED)September 30, 2009 AND
2008

NOTE 2- SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)

Recent Accounting Pronouncements

Effective
July 1, 2009, the Company adopted the Financial Accounting Standards Board
(FASB) Accounting Standards Codification (ASC) 105-10,Generally Accepted Accounting Principles  Overall(ASC 105-10). ASC 105-10 establishes theFASB Accounting Standards
Codification(the Codification) as the source
of authoritative accounting principles recognized by the FASB to be applied by
nongovernmental entities in the preparation of financial statements in
conformity with U.S. GAAP. Rules and interpretive releases of the SEC under
authority of federal securities laws are also sources of authoritative U.S. GAAP
for SEC registrants. All guidance contained in the Codification carries an equal
level of authority. The Codification superseded all existing non-SEC accounting
and reporting standards. All other non-grandfathered, non-SEC accounting
literature not included in the Codification is non-authoritative. The FASB will
not issue new standards in the form of Statements, FASB Staff Positions or
Emerging Issues Task Force Abstracts. Instead, it will issue Accounting
Standards Updates (ASUs). The FASB will not consider ASUs as authoritative in
their own right. ASUs will serve only to update the Codification, provide
background information about the guidance and provide the bases for conclusions
on the change(s) in the Codification. References made to FASB guidance
throughout this document have been updated for the Codification.

The
Company elected a partial deferral of ASC 820-10 (previously SFAS No 157)
related to the measurement of fair value used when evaluating goodwill, other
intangible assets, and other long-lived assets for impairment. We adopted the
provisions of this statement for non-financial assets and liabilities effective
January 1, 2009. This adoption did not have impact on its Consolidated Financial
statements.

In
December 2007, the FASB issued ASC 805 Business Combinations (previously SFAS
141R). ASC 805 establishes principles and requirements for how an acquirer
recognizes and measures in its financial statements the identifiable assets
acquired, the liabilities assumed, any non controlling interest in the acquiree
and the goodwill acquired. ASC 805 also establishes disclosure requirements to
enable the evaluation of the nature and financial effects of the business
combination. This statement was adopted beginning January 1, 2009. There was no
significant impact on the Companys financial position or results of operations
as a result of the adoption of ASC 805.

In March
2008, the FASB issued ASC 815 (previously SFAS No. 161), Disclosures about
Derivative Instruments and Hedging Activities, which requires additional
disclosures about the objectives of using derivative instruments, the method by
which the derivative instruments and related hedged items are accounted for and
its related interpretations, and the effect of derivative instruments and
related hedged items on financial position, financial performance, and cash
flows. ASC 815 also requires disclosure of the fair values of derivative
instruments and their gains and losses in a tabular format. ASC 815 is effective
for financial statements issued for fiscal years and interim periods beginning
after November 15, 2008, with early adoption encouraged. The Company adopted
this standard effective January 1, 2009. The implementation of this standard did
not have a material impact on our consolidated financial statements. (Please see
Note 10 below for the expanded disclosure regarding derivative instruments in
accordance with the pronouncement).

In April
2009, the FASB issued ASC 320-10 (previously FSP SFAS 115-2 and FAS 124-2),
Recognition and Presentation of Other-Than-Temporary Impairments. This FSP
amends the other-than-temporary impairment guidance for debt securities to make
the guidance more operational and to improve the presentation and disclosure of
other-than-temporary impairments in the financial statements. The most
significant change the ASC brings is a revision to the amount of
other-than-temporary loss of a debt security recorded in earnings. The Company
adopted this standard effective April 1, 2009. The implementation of this
standard did not have a material impact on our consolidated financial
statements.

12

---

INTELLIGROUP,
INC.NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED)September 30, 2009 AND 2008

NOTE 2- SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)

In April
2009, the FASB issued ASC 820-10 (previously FSP SFAS 157-4), Determining Fair
Value When the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That Are Not Orderly. This
ASC provides additional guidance for estimating fair value, Fair Value
Measurements, when the volume and level of activity for the asset or liability
have significantly decreased. This ASC also includes guidance on identifying
circumstances that indicate a transaction is not orderly. This ASC emphasizes
that even if there has been a significant decrease in the volume and level of
activity for the asset or liability and regardless of the valuation technique(s)
used, the objective of a fair value measurement remains the same. Fair value is
the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction (that is, not a forced liquidation or
distressed sale) between market participants at the measurement date under
current market conditions. The Company adopted this standard effective April 1,
2009. The implementation of this standard did not have a material impact on our
consolidated financial statements.

In April
2009, the FASB issued ASC 825-10 (previously FSP FAS 107-1 and APB 28-1),
Interim Disclosures about Fair Value of Financial Instruments. Disclosures about
Fair Value of Financial Instruments require disclosures about fair value of
financial instruments for interim reporting periods of publicly traded companies
as well as in annual financial statements. The Company adopted this standard
effective April 1, 2009. (Please see Note 10 below for the expanded disclosure
on the fair value of financial instruments in accordance with the
pronouncement).

In May
2009, the FASB issued ASC 855 (previously SFAS No. 165), Subsequently. ASC 855
established general standards of accounting for the disclosure of events that
occur after the balance sheet date but before financial statements are issued or
are available to be issued. The adoption of ASC 855 required us to disclose the
date through which we have evaluated subsequent events and whether that date is
the date the financials were issued. The Company adopted this standard effective
April 1, 2009. (Please see Note 14 below for the disclosure on subsequent events
in accordance with the pronouncement).

In August
2009, the Financial Accounting Standards Board (FASB) issued Accounting
Standards Update (ASU) No. 2009-05, Measuring Liabilities at Fair Value
(ASU 2009-05). The amendments in this ASU apply to all entities that measure
liabilities at fair value and provides clarification for circumstances in which
a quoted price in an active market for the identical liability is not available,
an entity is required to measure fair value using one or more techniques laid
out in this ASU. The guidance provided in this ASU is effective for the first
reporting period (including reporting periods) beginning after issuance. The
Company does not expect the adoption of this ASU to have a material impact on
its consolidated financial statements.

In
October 2009, the FASB issued ASU 2009-13, Multiple-Deliverable Revenue
Arrangements, (amendments to FASB ASC Topic 605, Revenue Recognition) (ASU
2009-13). ASU 2009-13 requires entities to allocate revenue in an arrangement
using estimated selling prices of the delivered goods and services based on a
selling price hierarchy. The amendments eliminate the residual method of revenue
allocation and require revenue to be allocated using the relative selling price
method. ASU 2009-13 is effective on a prospective basis for revenue arrangements
entered into or materially modified in fiscal years beginning on or after June
15, 2010, with early adoption permitted. ASU 2009-13 will become effective for
the Company with its fiscal year beginning January 1, 2011.

13

---

INTELLIGROUP, INC.NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED)September 30, 2009 AND 2008

NOTE 3- LINE OF CREDIT

On May 22, 2008, the Company and its
wholly-owned subsidiary Empower, Inc. closed out the existing $15 million line
of credit with Steel City Capital Funding. Concurrently, the Company entered
into a revolving credit loan and security agreement (Credit Agreement) with
HSBC Bank, (the Bank). The Credit Agreement is comprised of a three year
revolving line of credit pursuant to which the Company can borrow up to $10
million at the Banks Base Rate (as defined in the Credit Agreement) of 3.25% as
of September 30 2009, minus 0.85% percent. The credit facility is collateralized
by substantially all of the assets of the United States based operations and all
subsidiary stock (not to exceed 65% of the Equity Interests of any Foreign
Subsidiary). The maximum borrowing availability under the Credit Agreement is
based upon a percentage of eligible billed and unbilled accounts receivable. The
Credit Agreement provides for certain financial covenants that shall only be
tested as of the end of any fiscal quarter.

The
Company was in compliance with the applicable financial covenants of the loan
agreement related to the Credit Agreement as of September 30, 2009.

As of September 30, 2009, the
Company had $0.1 million outstanding borrowings under the Credit Agreement. The
Company estimates undrawn availability under the Credit Facility to be $9.9
million as of September 30, 2009.

The Company is prohibited from
paying dividends under the terms of the Credit Agreement.

NOTE 4- RELATED PARTY
TRANSACTIONS

Effective August 1, 2005,
Intelligroup Asia Pvt. Ltd. (IGA) entered into an agreement to lease certain
premises for certain of the Companys India operations from ILabs Hyderabad
Technology Center Pvt. Ltd. (ILabs), a party with which two members of the
Companys Board of Directors are affiliated. The terms of the lease agreement
provide for, among other things: (1) a minimum lease period of five years with
an option for two three-year renewal periods; (2) payment of a security deposit
equivalent to nine (9) months rent in the amount of 16.3 million Indian rupees
(approximately $339,000); (3) payment of monthly lease fees in the amount of 1.7
million Indian rupees (approximately $37,000), subject to yearly five percent
(5%) escalation; and (4) monthly operations and maintenance fees of 0.5 million
Indian rupees (approximately $10,000). Rent paid for the three month period
ended September 30, 2009 towards such lease was 8.0 million rupees
(approximately $167,000). There are no advance lease rentals as of September 30,
2009.

NOTE 5- LITIGATION

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

14

---

INTELLIGROUP,
INC.NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED)September 30, 2009 AND 2008

NOTE 6- SHAREHOLDERS EQUITY

**Share-Based Compensation
Plans**

The Company has four share-based
compensation plans that reserve common shares for issuance to key employees,
consultants and directors. The compensation cost that has been charged against
income for those plans was $0.1 million for the three month period ended
September 30, 2009 and $0.2 million for the three month period ended September
30, 2008. The compensation cost that has been charged against income for those
plans was $0.5 million for the nine month period ended September 30, 2009 and
$0.8 million for the nine month period ended September 30, 2008. The Company did
not recognize income tax benefit in the condensed consolidated statement of
operations and comprehensive income for the first nine months of 2009 or 2008,
due to its accumulated net operating losses. No options were forfeited during
the nine month period ended September 30, 2009.

Stock
Options:

The fair value of option grants is
estimated on the date of grant using the Black-Scholes option-pricing model.
There were no grants issued during the nine month period ended September 30,
2009.

Nine Months
    
    Three MonthsPeriod Ended Sep 30,
    
    Period Ended Sep 30,**2009**
    
    **2008**
    
    **2009**
    
    **2008**Expected Volatility
    
    -
    
    81.51-84.69%
    
    -
    
    81.51%Expected
      Lives(years)
    
    -
    
    6.0625
    
    -
    
    6.0625Risk free Interest Rate
    
    -
    
    2.80-3.50%
    
    -
    
    3.20%Expected
      Dividends
    
    -
    
    0%
    
    -
    
    0%


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

As of September 30, 2009, there was
$0.5 million of total unrecognized compensation cost related to the stock
options. That cost is expected to be recognized over the next 3 years.

The
following table summarizes the share-based compensation expense for stock
options that were recorded in accordance with ASC 718 for the nine month period
ended September 30, 2009 and 2008 (in thousands):

Nine Months
    
    Three Months PeriodPeriod Ended Sep 30,
    
    Ended Sep 30,**2009**
    
    **2008**
    
    **2009**
    
    **2008**Cost of Revenue
    
    $
    170
    
    277
    
    $
    45
    
    73Selling, general
      and administrative expenses
    
    
    345
    
    515
    
    
    86
    
    164Total
    
    $
    515
    
    792
    
    $
    131
    
    237


15

---

INTELLIGROUP,
INC.NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED)September 30, 2009 AND 2008

NOTE 6 - SHAREHOLDERS EQUITY
(Continued)

*Share Repurchase
Program:***

On
October 24 2008, our Board of Directors approved a share repurchase program of
up to $5,000,000 of the Company's common stock over an 18 month period ending
April 24, 2010. The share repurchase program will be funded using the Company's
working capital and authorizes the Company to repurchase shares from time to
time through open market or privately negotiated transactions. The Company also
has adopted a Rule 10b5-1 trading plan and intends to adopt additional Rule
10b5-1 trading plans that will allow the Company to purchase its shares at times
when it ordinarily would not be in the market due to its internal trading
policy. The program will expire on the earlier of (i) the repurchase of the
maximum number of shares under the program, (ii) the 18 month anniversary of the
approval of the program or (iii) a determination by the Board of Directors to
discontinue the program. The Company is not obligated to continue to repurchase
shares under the authorization or enter into additional Rule 10b5-1 trading plan
and the timing; actual number and value of shares purchased will depend on many
factors, including the Companys cash flow and the liquidity and price
performance of its shares.

As of Sep
30, 2009, a total of 1,197,881 shares have been repurchased at an average price
of $1.65 out of which 446,931 and 1,118,581 shares were repurchased at an
average price of $1.89 and $1.65 during three and nine month period ended
September 30, 2009, respectively. All the repurchased shares are constructively
retired.

NOTE 7- SEGMENT DATA AND GEOGRAPHIC
INFORMATION

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

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

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

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

Accordingly, the Companys condensed consolidated operating results for
the three and nine month period ended September 30, 2009 and 2008 are presented
in the following geographic segments (in thousands):

16

---

INTELLIGROUP,
INC.NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED)September 30, 2009 AND 2008

NOTE 7- SEGMENT DATA AND GEOGRAPHIC
INFORMATION (Continued)

|                                             |  | United
      States |  | India  |  | Europe |   | Japan |       | Elimination |  | Total  
|-------------------------------------------- |  | ------------------- |  | ------ |  | ------ | - | ----- | ----- | ----------- |  | -------
|Three months period ended September 30, 2009 |  |                     |  |        |  |        |   |       |       |             |  |        
|Revenue                                      |  | 23,969              |  | 1,628  |  | 5,131  |   |       | 1,002 |             |  | -      
|Inter-segment Revenue                        |  | 292                 |  | 6,553  |  | -      |   |       | -     |             |  | (6,845 
|Operating Income /
      (Loss)              |  | 2,476               |  | 575    |  | 712    |   |       | (144  | )           |  | -      
|Income
      Tax Expense                     |  | 308                 |  | 231    |  | (33    | ) |       | -     |             |  | -      
|Net Income /
      (Loss)                    |  | 2,197               |  | 637    |  | 800    |   |       | (74   | )           |  | -      
|                                            
|Three months period ended September 30, 2008 |  |                     |  |        |  |        |   |       |       |             |  |        
|Revenue                                      |  | 33,069              |  | 2,565  |  | 4,457  |   |       | 1,116 |             |  | -      
|Inter-segment Revenue                        |  | 93                  |  | 9,586  |  | -      |   |       | -     |             |  | (9,679 
|Operating Income /
      (Loss)              |  | 1,592               |  | 1,923  |  | 140    |   |       | 206   |             |  | -      
|Income
      Tax Expense                     |  | 15                  |  | 282    |  | 160    |   |       | -     |             |  | -      
|Net Income /
      (Loss)                    |  | 1,670               |  | 819    |  | (8     | ) |       | 215   |             |  | -      
|                                            
|Nine months period ended September 30, 2009  |  |                     |  |        |  |        |   |       |       |             |  |        
|Revenue                                      |  | 70,002              |  | 5,351  |  | 15,111 |   |       | 3,095 |             |  | -      
|Inter-segment Revenue                        |  | 589                 |  | 19,806 |  | -      |   |       | -     |             |  | (20,395
|Operating Income /
      (Loss)              |  | 4,512               |  | 2,093  |  | 2,090  |   |       | (403  | )           |  | -      
|Income
      Tax Expense                     |  | 399                 |  | 937    |  | 293    |   |       | -     |             |  | -      
|Net Income /
      (Loss)                    |  | 4,160               |  | 2,202  |  | 1,696  |   |       | (518  | )           |  | -      
|Property & Equipment, net                    |  | 416                 |  | 2,006  |  | 871    |   |       | 53    |             |  | -      
|Total Assets                                 |  | 42,908              |  | 33,206 |  | 9,533  |   |       | 1,344 |             |  | (24,156
|                                            
|Nine months period ended September 30, 2008  |  |                     |  |        |  |        |   |       |       |             |  |        
|Revenue                                      |  | 93,554              |  | 8,114  |  | 14,256 |   |       | 3,873 |             |  | -      
|Inter-segment Revenue                        |  | 154                 |  | 26,823 |  | -      |   |       | -     |             |  | (26,977
|Operating Income /
      (Loss)              |  | 2,822               |  | 4,579  |  | 693    |   |       | 99    |             |  | -      
|Income
      Tax Expense                     |  | 59                  |  | 775    |  | 260    |   |       | -     |             |  | -      
|Net Income /
      (Loss)                    |  | 3,092               |  | 1,832  |  | 558    |   |       | 212   |             |  | -      
|Property & Equipment, net                    |  | 528                 |  | 2,415  |  | 1,317  |   |       | 55    |             |  | -      
|Total Assets                                 |  | 49,291              |  | 34,990 |  | 9,348  |   |       | 2,230 |             |  | (31,503

NOTE 8- COMMITMENTS AND
CONTINGENCIES

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

17

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INTELLIGROUP, INC.NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED)September 30, 2009 AND 2008

NOTE 8- COMMITMENTS AND
CONTINGENCIES (Continued)

IRC
Section 355(e) provides that the Company may be required to recognize a gain
equal to the excess of the fair market value of the SeraNova shares distributed
over their tax basis if the distribution is part of a plan pursuant to which one
or more persons acquire 50% or more of SeraNova common stock within two years of
the distribution date. Should the spin-off ultimately be construed as taxable
the resultant tax liability could be in the range of $55 million to $65 million
and related penalties (if assessed) and interest could increase the amount by
$45 million to $55 million as of September 30, 2009, depending on the facts that
ultimately are established. No future benefits would inure to the Company as a
result of imposition of a tax on the SeraNova distribution, and no reserve has
been recorded for this potential tax. However, should such a tax liability be
imposed, the Company may be able to utilize some of its existing net operating
losses to mitigate this tax liability.

***Employment Agreements***

As of September 30, 2009, the
Company had employment agreements with certain of its executive officers, which
provide for minimum payments in the event of termination for reasons other than
just cause. The aggregate amount of compensation commitment in the event of
termination under such agreements is approximately $1.6 million.

In addition, the Companys wholly
controlled and majority owned subsidiary Intelligroup Asia Pvt. Ltd. (IGA) had
entered into Severance Packages totaling approximately $0.6 million with certain
former members of the IGA management team. Pursuant to the terms of the
Agreement for Severance Package, the Severance Package is activated upon the
fulfillment of certain events, including a change in management of the Company
or IGA. In April 2005, following the termination of the Companys Chief
Executive Officer, three members of the IGA management team, each of whom had a
Severance Package, resigned. Except as set forth below, to date, the Company has
not received any claim for payment of the Severance Package. In September 2005,
two former members of the IGA management team sent IGA notices under Section 433
and 434 of the Indian Companies Act, 1956 for payment of such Severance Package.
Such claims have not been pursued since such initial notice was served, and the
Company does not believe that such severance amount is owed. In the event the
Company is unsuccessful in defending against such claim for payment, the Company
would owe approximately $0.6 million to such individuals.

NOTE 9- RESTRICTED CASH AND
INVESTMENTS

The various components of restricted
cash and investments consist of the following:

|                                 |  |                                                                  |  | Sep
      30, |       | Dec
      31,
|-------------------------------- |  | ---------------------------------------------------------------- |  | ------------- | ----- | -------------
|Kind of Cash/Investment          |  | Restricted against                                               |  | 2009          |       | 2008         
|Non
      Convertible Debentures |  | Lien
      towards derivative contracts                          |  | $             | 2,319 |              
|Term deposits                    |  | Lien towards derivative
      contracts                          |  |               | -     |              
|Term
      deposits              |  | Bank
      guarantees for various statutory and customer related |  |               | 156   |              
|                                
|Total                            |  |                                                                  |  | $             | 2,475 |              

Please refer to Note 10  Financial
instruments for the fair value measurement reporting of the restricted cash and
investments.

18

---

INTELLIGROUP, INC.NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED)September 30, 2009 AND 2008

NOTE 10- FINANCIAL INSTRUMENTS

The
Company measures certain financial assets and liabilities at fair value on a
recurring basis, including derivative instruments and investments. The fair
value measurements of these derivative instruments and investments were
determined using the following inputs of September 30, 2009:

|                                         |  |       |        |           |  | Quoted Prices in   |   | Significant Other |   | Significant Other  
|---------------------------------------- |  | ----- | ------ | --------- |  | ------------------ | - | ----------------- | - | -------------------
|                                         |  |       |        |           |  | Active Markets for |   | Observable Inputs |   | Unobservable Inputs
|                                         |  |       |        |           |  | Identical Assets   |   |                   |   |                    
|                                         |  | Total |        | (Level 1) |  | (Level 2)          |   | (Level 3)        
|Assets:                                  |  |       |        |           |  |                    |   |                   |   |                    
|Short-term
      Investments (Note a)    |  | $     | 1,852  |           |  | $                  | - |                   | $ | 1,852              
|Bank guarantees & Term Deposits (Note b) |  | $     | 156    |           |  | $                  | - |                   | $ | 156                
|Investments
      (Note c)               |  | $     | 2,319  |           |  | $                  | - |                   | $ | 2,319              
|Total                                    |  | $     | 4,327  |           |  | $                  | - |                   | $ | 4,327              
|                                         | 
|Liabilities:                             |  |       |        |           |  |                    |   |                   |   |                    
|Derivative
      Instruments (Note d)    |  | $     | (1,057 | )         |  | $                  | - |                   | $ | (1,057             
|Total                                    |  | $     | (1,057 | )         |  | $                  | - |                   | $ | (1,057             

| | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  | Represents term deposits and is
      reported under the head Short Term Investments in the current assets on
      the condensed consolidated balance sheet as of September 30, 2009. The
      fair value in the table is the face value of the instruments plus interest
      accrued up to September 30, 2009.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  | Reported as Restricted cash and
      investments on the condensed consolidated balance sheet as of September
      30, 2009. (Please refer note 9  Restricted cash and investments.) The
      fair value is the face value of the instruments plus interest accrued up
      to September 30, 2009.             
| | The short-term investments and
      term deposits referred above are considered as trading securities. The
      carrying value of these investments as of September 30, 2009 approximates
      the fair value. Unrealized gains of $0.5 million and realized gains of
      $0.1 million on these investments were recorded for the three and nine
      month period ended September 30, 2009. Gross proceeds from sale of such
      investments amounted to approximately $14.1 millions for the nine month
      period ended September 30, 2009. A gain of $0.1 million was recorded on
      the sale of such investments.
| | c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  | Represents non convertible
      debentures reported under Restricted cash and Investments on the
      condensed consolidated balance sheet as of September 30, 2009. (Please
      refer note 9  Restricted cash and investments.) The fair value is derived
      based on market related inputs.              
| | d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  | Reported under current
      liabilities on the condensed consolidated balance sheets. The fair value
      is derived through external valuation based on market related
      inputs.                                                                                                                              

Derivative
Instruments:

In the
normal course of business, the Indian subsidiary of the Company actively looks
to mitigate the exposure of foreign currency market risk, by entering into
various derivative instruments, authorized under Company policies, with
counterparties that are highly rated financial institutions. The primary
exchange rate exposure of the Indian subsidiary is to the US Dollars.

19

---

INTELLIGROUP, INC.NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED) September 30, 2009 AND 2008

NOTE 10- FINANCIAL INSTRUMENTS
(Continued)

The Company uses derivative
instruments consisting of foreign currency exchange option and forward contracts
not designated as hedging instruments under ASC 815-10 to hedge exposure of
foreign currency market risk. Changes in the fair value of these instruments are
recognized in the condensed consolidated statement of operations and are
included in foreign exchange gain/ (loss). The Company had outstanding foreign
exchange contracts totaling $10.7 million as of September 30, 2009 and $29.1
million as of December 31, 2008. The Company has an option to settle its option
contracts in the event the contracted rates are more favorable than the
prevalent spot rates. The Company did not enter into any new foreign currency
forward or option contract during the nine month period ended September 30,
2009.

At September 30, 2009, summary
information about the instruments is as follows.

|                |  | Option
      Contracts |  | Forward
      Contracts 
|--------------- |  | ---------------------- |  | ------------------------
|Notional Amount |  | $8,000                 |  | $2,700                  
|Rates           |  | INR 43.45              |  | INR 44.09 to 44.93      
|Effective date  |  | 5/18/2007              |  | 6/30/2008,
    8/14/2008
|                |  |                        |  | and 8/20/2008           
|Maturity Dates  |  | 10/28/2009 to 05/26/10 |  | 10/30/2009 to 12/31/09  
|Fair Value      |  | ($853)                 |  | ($204)                  

The fair
values of derivative instruments in the condensed consolidated balance sheet as
of September 30, 2009 are as follows:

|                                                       |                                               | Sep
      30, |                   
|------------------------------------------------------ | --------------------------------------------- | ------------- | ------------------
|Derivative Instruments not designated as
      hedges: | Balance Sheet Location                        | 2009          | Dec 31,
      2008
|****Fair value of foreign exchange
      contracts     | ****Liability on derivative
      instruments | ($1,057       | )                 
|****Fair value of foreign exchange
      contracts     | ****Other long-term
      liabilities         | -             |                   
|Fair Value Total                                       |                                               | ($1,057       | )                 

The
effect of derivative instruments on the condensed consolidated statement of
operations for the nine and three month period ended September 30, 2009 and 2008
is as follows:

Amount of gain/ (loss) recognized
(000s)

|                            | Location of gain /
      (loss)     | Nine month
      period | Three month
      period
|--------------------------- | ----------------------------------- | ----------------------- | ------------------------
|Derivative Instruments not  | recongized on the Income            | ended                   | ended                   
|designated as
      hedges: | Statement                           |                         |                         
|                            |                                     | **30-Sep-09**           | **30-Sep-08**           
|Foreign Exchange Contracts  | Foreign currency transaction gain / |                         |                         
|                            | (loss), net                         | $                       | 102                     
|                            |                                     |                         |                         
|**Total**                   |                                     | **$**                   | **102**                 

Please also refer Note 12 below for the
various components of foreign currency transaction gain / (loss) as reported on
the condensed consolidated statement of operations and comprehensive income for
the three and nine month periods ending September 30, 2009 and 2008.

20

---

INTELLIGROUP,
INC.NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED)September 30, 2009 AND 2008

NOTE 11- EMPLOYEE BENEFIT PLANS

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

Net Gratuity Plan cost includes the
following components:

Nine
      Months
    
    Three
      MonthsPeriod Ended Sep 30,
    
    Period Ended Sep 30,2009
    
    2008
    
    2009
    
    2008Service Cost
    
    $
    86
    
    
    148
    
    
    29
    
    
    69Interest Cost
    
    
    39
    
    
    40
    
    
    2
    
    
    19Actuarial (Gain) / Loss
    
    
    5
    
    
    (50
    )
    
    21
    
    
    (73
    )Expected Return on
      Assets
    
    
    (8
    )
    
    0
    
    
    (3
    )
    
    0Net
      Gratuity Cost
    
    $
    122
    
    
    138
    
    
    49
    
    
    15


NOTE 12- FOREIGN CURRENCY
TRANSACTION GAIN/(LOSS), NET

Foreign
currency transaction gain / (loss) comprises of two components  i) ASC 830
(previously FAS 52) re-measurement gains or losses on the Accounts receivable
denominated in other than the functional currency and the mark to market gains
or losses of the derivative instruments as follows.

|                                                       |  | Nine
      Months    |          | Three
      Months  
|------------------------------------------------------ |  | -------------------- | -------- | --------------------
|                                                       |  | Period Ended Sep 30, |          | Period Ended Sep 30,
|                                                       |  | 2009                 |          | 2008                
|Foreign currency gain                                  |  | $                    | 39       |                     
|Derivative unrealized gain
      / (loss)              |  |                      | 362      |                     
|Derivative realized gain / (loss)                      |  |                      | ****(260 | )                   
|Total foreign
      currency transaction gain / (loss) |  | $                    | 141      |                     

NOTE 13- OTHER COMPREHENSIVE
INCOME

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

For the three month period ended
September 30, 2009, the Company recorded other comprehensive loss due to
translation adjustment of approximately $0.3 million on account of currency
fluctuations in Asia and Europe. Other comprehensive loss of approximately $2.6
million was recorded for the three month period ended September 30, 2008.

For the nine month period ended
September 30, 2009, the Company recorded other comprehensive income due to
translation adjustment of approximately $0.4 million on account of currency
fluctuations in Asia and Europe. Other comprehensive loss of approximately $5.2
million was recorded for the nine month period ended September 30, 2008.

NOTE 14- SUBSEQUENT EVENTS

The Company has evaluated all events
or transactions that occurred after September 30, 2009 through the filing date
of this document and did not have any material recognizable and unrecognizable
subsequent events.

21

---

INTELLIGROUP, INC.

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

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

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

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

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

- the impact of the global economic crisis which has
  and may continue to impact demand for our services;
- the inability to generate new sales and maintain
  profitability;
- the inability to attract and retain a sufficient
  number of highly skilled technical employees, particularly senior level
  technical personnel and project
  managers;
- changes in the political, regulatory, and economic
  conditions in India, which is where a substantial portion of our operations are located;
- effects of competition in the information
  technology services industry where there is a very high level of competition
  for employees and customers;
- restrictions imposed by U.S. immigration
  regulation which could affect the ability of our employees who are
  primarily Indian nationals to obtain the
  necessary work visas to work in the United States;
- future legislation impacting the off shore
  business model and increased anti-off-shoring sentiment in the United States
  and other jurisdictions could significantly
  affect the demand for our services and our customer delivery
  model.
- inability to maintain access to external
  funding;
- currency fluctuations may negatively impact our
  financial results, and this may in turn discourage investment.
- inability to maintain effective internal control
  over financial reporting or to remediate any weaknesses that may arise in
  the future;
- claims for damages by third parties, including
  liability claims arising from negligent acts, errors, mistakes or omission
  in rendering our IT professional
  services;
- our dependence on a limited number of large
  customers;
- a systems failure or disruption in
  telecommunications could disrupt our business and result in lost customers and
  negative publicity;
- dependence on a limited number of software
  partners;
- disruption to our operations, including
  disruptions caused by geopolitical conditions in India;
- the effects of volatility and lack of liquidity in
  our common stock;
- our inability to protect our intellectual
  property;
- third party claims that our services infringe on
  their intellectual property rights;

22

---

INTELLIGROUP, INC.

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

- we may be subject to increased tax liabilities,
  including if the spin-off in 2000 of our former subsidiary, SeraNova, is
  determined to be taxable. We could be liable in the range of $55 million to
  $65 million and related penalties (if assessed) and interest could increase
  the amount by $45 million to $55 million. In July 2000, we completed the
  tax-free spin-off of SeraNova, our former subsidiary. In March 2001, SeraNova
  and Silverline Technologies Limited (Silverline) consummated the acquisition
  of SeraNova by Silverline. Had the acquisition of SeraNova by Silverline been
  contemplated at the time of the spin-off, the spin-off would have been a
  taxable transaction. Based upon the information available to the us, we
  believe that such acquisition was not contemplated at the time of the spin-off
  of SeraNova by Intelligroup, and accordingly should not impact the tax-free
  nature of the spin-off. However, if it were determined that the spin-off was
  taxable, Intelligroup may have to bear the liability to pay such tax
  liability, which would be material. Please refer to Note 9 to the financial
  statements on in our annual report on Form 10-K/A for the year ended December
  31, 2008; and
- the factors listed under Item 1A. Risk Factors
  in our annual report on Form 10-K/A for the year ended December 31, 2008 and
  other reports that we file with the SEC.

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

Overview

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

The
Company helps its customers align and optimize their technology platforms,
primarily their ERP systems, with their businesses. While historically ERP
providers had focused on providing solutions for large market companies with
revenues of over $5 billion such systems have increasingly become mission
critical for companies with revenues of between $500 million and $5 billion
(Mid-Tier Market) or more, as these systems are used to help them drive
greater revenue and productivity as well as to better manage and control
costs.

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

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

Key Factors in Evaluating the
Companys Financial Performance

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

23

---

INTELLIGROUP, INC.

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

Revenue

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

Fixed Price Projects

The Company has provided services on
certain projects in which it, at the request of the clients, offers a fixed
price for its services. For the nine month period ended September 30, 2009,
revenue derived from projects under fixed-time and fixed price service contracts
represented approximately 38% and 10%, respectively, of the Companys total
revenue. For the nine month period ended September 30, 2008, revenue derived
from projects under fixed-time and fixed price service contracts represented
approximately 29% and 10%, respectively, of the Companys total revenue. No
single fixed price project was material to the Companys business during the
three and nine month period ended September 30, 2009 and 2008. The Company
believes that, as it pursues its strategy of providing application management
services to customers, it will continue to offer fixed price projects. The
Company believes that there are certain risks related to fixed price
arrangements and thus prices such arrangements to reflect the associated risk.
There can be no assurance that the Company will be able to complete such
projects within the fixed price timeframes. The failure to perform within such
fixed price contracts, if entered into, could have a material adverse effect on
the Companys business, financial condition and results of operations.

Customer Concentration

The Company has derived and believes
that it will continue to derive a significant portion of its revenue from a
limited number of customers and projects. For the three month period ended
September 30, 2009 and 2008, the Companys ten largest customers accounted for
in the aggregate approximately 37% and 36% of its revenue, respectively. For the
nine month period ended September 30, 2009 and 2008, the Companys ten largest
customers accounted for in the aggregate approximately 38% and 37% of its
revenue, respectively. During the three and nine month period ended September
30, 2009 and 2008, no single customer accounted for 10% or more of revenues.
There can be no assurance that such customers will continue to engage the
Company in the future at current levels of retention, if at all.

Software Partners

For the three and nine month period
ended September 30, 2009 and 2008, the Company derived the following percentages
of total revenue from projects in which the Company implemented, extended,
maintained, managed or supported software developed by SAP and Oracle.

Percentage of
      RevenuesNine
      Months
    
    Three
      MonthsPeriod Ended Sep 30,
    
    Period Ended Sep 30,2009
    
    2008
    
    2009
    
    2008SAP
    
    71
    %
    
    77
    %
    
    71
    %
    
    75
    %Oracle
    
    15
    %
    
    12
    %
    
    14
    %
    
    13
    %e-Business
    
    6
    %
    
    5
    %
    
    6
    %
    
    5
    %Others
    
    8
    %
    
    6
    %
    
    9
    %
    
    7
    %Total
    
    100
    %
    
    100
    %
    
    100
    %
    
    100
    %


24

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INTELLIGROUP, INC.

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

Markets

The Company currently serves the
United States market with its headquarters in Princeton, New Jersey, and branch
offices in Atlanta, Georgia, Naperville, Illinois and Milpitas, California. The
Company also maintains local offices to serve the markets in India, the United
Kingdom, Denmark, Japan and the United Arab Emirates.

Expenses

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

Application of Critical Accounting
Policies

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

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

While there have been no material
changes to its critical accounting policies and estimates as identified in Item
7, Managements Discussion and Analysis of Financial Condition and Results of
Operations, included in the Companys annual report on Form 10-K/A for the
fiscal year ended December 31, 2008, the Company has updated below the
disclosure of its critical accounting policies to reflect more accurately the
policies it has been following

Cash and Cash
Equivalents

The
Company considers all highly liquid debt instruments and other short-term
investments with a maturity of three months or less, when purchased, to be cash
equivalents.

The
Company maintains cash balances at several financial institutions that are
insured by the Federal Deposit Insurance Corporation up to $250,000. The Company
maintains cash balances in excess of insured amounts.

The Company did not have any cash
equivalents as at September 30, 2009 and December 31, 2008.

Revenue Recognition and Allowance
for Doubtful Accounts

The
Company generates revenue from professional services rendered to customers.
Revenue is recognized under the Companys contracts generally when persuasive
evidence of an arrangement exists, the sales price is fixed or determinable and
collection of amounts billed is reasonably assured. The majority of our revenue
is generated under time-and-material contracts whereby costs and revenue are
recognized as services are performed, with the corresponding cost of providing
those services reflected as cost of revenue. The majority of customers are
billed on an hourly or daily basis whereby actual time is charged directly to
the customer. Such method is expected to result in reasonably consistent profit
margins over the contract term.

25

---

INTELLIGROUP, INC.

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

The
Company also derives a portion of our revenue from fixed-price, fixed-time
contracts. Revenue generated from most fixed-price contracts, including most
application management and support contracts, is recognized ratably over the
contract term. Certain fixed price contracts are for implementation services,
including design and modification, for which specifications are provided by the
customer. The scope of the work is usually defined in terms of overall
deliverables and the revenue for such work is ultimately earned by achieving the
deliverables. We consider the performance of service towards the planned
deliverable as partial execution of the deliverable and hence the revenue
generated from such fixed-price contracts is recognized using the POC method.
The POC method recognizes the legal and economic results of contract performance
on a timely basis. This method of accounting relies on estimates of total
expected contract revenues and costs. Where the contracts involve only
implementation services, the Company recognizes revenue based on a proportional
performance method. The pattern of performance on these contracts closely
resembles the time spent by our employees and therefore efforts-expended,
measured based on the cost of the employees time, is used as a measure for the
proportion of services rendered in relation to the total services expected to be
rendered.

The use
of the POC method or the proportional performance method requires significant
judgment relative to estimating the number of hours or days required to complete
the contracted scope of work, including assumptions and estimates relative to
the length of time to complete the project and the nature and complexity of the
work to be performed. Our project delivery and business unit finance personnel
continually review labor hours incurred and estimated total labor hours, which
may result in revisions to the amount of recognized revenue for the contract.
Changes in estimates are accounted for in the period of change. If we do not
accurately estimate the resources required or the scope of work to be performed
for a contract or if we do not manage the project properly within the planned
time period, then a loss may have to be recognized on the contract. Losses are
recorded in the period when they become known, and estimated through the
completion of the contract.

We
occasionally derive revenue from projects involving multiple revenue-generating
activities. Accordingly, the revenue from such projects is accounted for in
accordance with the ASC 605-25 (previously Emerging Issues Task Force of the
Financial Accounting Standards Board (FASB) Issue No. 00-21), Accounting for
Revenue Arrangements with Multiple Deliverables. If a contract involves the
provision of multiple service elements, total estimated contract revenue is
allocated to each element based on the relative fair value of each element. The
amount of revenue allocated to each element is limited to the amount that is not
contingent upon the delivery of another element in the future. Revenue for each
element is then recognized as described above depending upon whether the
contract is a time-and-materials contract or a fixed-price, fixed-time contract.

Any
estimation process, including that used in preparing contract accounting models,
involves inherent risk. We reduce the inherent risk relating to revenue and cost
estimates in proportional performance models through approval and monitoring
processes. Risks relating to service delivery, usage, productivity and other
factors are considered in the estimation process.

The
Company accrues for revenue and receivables for services rendered between the
last billing date and the balance sheet date. Unbilled services as of September
30, 2009 and December 31, 2008 represent services provided through nine month
period ended September 30, 2009 and the year ended December 31, 2008,
respectively, which are billed subsequent to the balance sheet date. All such
amounts are anticipated to be collected over the next twelve months.

Reimbursements of out-of-pocket expenses received from clients have been
included as part of revenues in accordance with ASC 605 (previously EITF 01-14),
Income Statement Characterization of Reimbursements Received for
Out-of-Pocket Expenses Incurred.

We
establish billing terms at the time project deliverables are agreed, and we
continually monitor timely payments from customers and assess collection issues.
We maintain allowances for doubtful accounts for estimated losses resulting from
the inability of our clients to make required payments. We base our estimates on
historical collection and write-off experience, current trends, credit policy,
detailed analysis of specific client situations and percentage of accounts
receivable by aging category.

26

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INTELLIGROUP, INC.

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

Results of Operations  Consolidated
 nine month period ended September 30, 2009 compared to nine month period ended
September 30, 2008.

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

Percentage of RevenueNine months ended period Sep
    30,2009
    
    2008Revenue
    
    100.0
    %
    
    100.0
    %Cost of
      Revenues
    
    66.5
    
    
    68.8Gross Profit
    
    33.5
    
    
    31.2Selling general and
      administrative expenses
    
    22.6
    
    
    22.9Depreciation and
      amortization
    
    2.0
    
    
    1.4Total operating expenses
    
    24.6
    
    
    24.3Operating income
    
    8.9
    
    
    6.9Interest income
    
    0.1
    
    
    0.2Interest expense
    
    (0.1
    )
    
    (0.3
    )Foreign currency transaction gain (loss), net
    
    0.2
    
    
    (1.4
    )Other income, net of other
      expense
    
    0.7
    
    
    0.4Income before income
      tax provision
    
    9.8
    
    
    5.8Income tax provision
    
    1.7
    
    
    0.9Net income
    
    8.1
    %
    
    4.9
    %


*Nine month period ended
September 30, 2009 compared to Nine month period ended September 30, 2008.*

The following discussion compares the
consolidated results of operations for the nine month period ended September 30,
2009 and 2008.

*Revenue*: Total revenue decreased by 22% or $26.2 million from $119.8
million for the nine month period ended September 30, 2008 to $93.6 million as
compared to the nine month period ended September 30, 2009. The decrease was due
to the impact of the challenging global economic environment. Despite adding 92
new customers during the nine month period ended September 30, 2009, the volume
of our business declined as our customers and prospective customers deferred the
decision-making on a range of IT services initiatives, particularly shorter-term
projects.Due
to decline in customer demand competitive pressures have resulted in downward
pressure on pricing. Our on site rates reduced by 4% from an average rate of
$106.7 during the nine month period ended September 30, 2008 to an average rate
of $102.6 during the nine month period ended September 30, 2009. Our off shore
rates were reduced by 7% from an average rate of $23.3 during the nine month
period ended September 30, 2008 to an average rate of $21.6 during the nine
month period ended September 30, 2009. Recently, however, we have seen signs
that the market for IT services has begun to stabilize and therefore we are not
expecting further significant declines in revenues on a sequential basis.

*Cost of revenue and gross
profit*: The cost of revenue has decreased by
24.5% or 20.2 from $82.5 million for the nine month period ended September 30,
2008 to $62.3 million for the nine month period ended September 30, 2009. The
decrease was attributable to the decrease in payroll costs by 9.7% due to
decrease in the headcount, decrease in sub-contractors cost by 4.8% due to
reduction in the headcount of sub-contractors, decrease in project related
expenses by 6.7% due to decline in volume of services sold and decrease by 3.3%
due to fluctuations in the functional currencies of the
subsidiaries. Gross profit has decreased by 16.2% from $37.3 million for the
nine month period ended September 30, 2008 to $31.3 million for the nine month
period ended September 30, 2009. The decrease in gross profit was a result of
the decrease in the revenues partially offset by the cost savings during the
nine month period ended September 30, 2009. Gross margin has increased from
31.2% for the nine month period ended September 30, 2008 to 33.5% for the nine
month period ended September 30, 2009. The increase in gross margin was due to
improvement in utilization rate by 7%. The cost of revenue has decreased by 24%
as opposed to a decrease in revenue by 22%, thereby contributing to an increase
in gross margin.

27

---

INTELLIGROUP, INC.

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

Selling, general and administrative expenses: Selling, general and administrative expenses consist of salaries and
related benefits for sales and general administrative personnel, facilities
costs, related travel and entertainment and professional fees. Selling, general
and administrative expenses decreased by 23.2% from $27.5 million for the nine
month period ended September 30, 2008 to $21.1 million for the nine month period
ended September 30, 2009. The decrease in selling, general and administrative
expenses is due to (i) reduction in operating lease rentals and maintenance by
4.1% due to relocation of the office facility, (ii) fluctuations in the
functional currencies of the subsidiaries by 3.8%, (iii) sales commission and
payroll expenses have decreased by 7.3% due to reduction in head count and
revenue during the period and (iv) other advertising, insurance and general
expenses have decreased by 8% in line with the decrease in the business of the
Company.

Depreciation and amortization expenses:The Company recorded depreciation and amortization expenses of $1.9
million for the nine month period ended September 30, 2009 as compared to $1.7
million for the nine month period ended September 30, 2008. The marginal
increase was due to additional purchase of fixed assets during the nine month
period ended September 30, 2009.

Interest Expense:For the nine month
period ended September 30, 2009 and 2008, the Company recorded $0.06 million and
$0.4 million as interest expense respectively. The decrease in interest expense
was due to repayment of the borrowings from the line of credit in
2008.

*Foreign Currency gain
(loss)*: For the nine month period ended
September 30, 2009, the Company recorded foreign currency transaction gains of
approximately $0.1 million as compared to transaction losses of approximately
$1.7 million for the nine month period ended September 30, 2008. The loss
recorded during the nine month period ended September 30, 2008 was due to marked
to market valuation of the outstanding derivative instruments consequent to
significant fluctuations in Indian Rupee (INR) and US Dollar (USD).

*Interest and Other
Income:*Interest and other income was
approximately $0.8 million for both the nine month period ended September 30,
2009 and 2008.

Income
tax provision:The Company recorded an income
tax provision of $1.6 million on a pretax income of $9.2 million for the nine
month period ended September 30, 2009 as compared to an income tax provision of
$1.1 million on a pretax income of $6.8 million for the nine month period ended
September 30, 2008. The effective tax rate has increased to a tax provision of
18% during the nine month period ended September 30, 2009 from a tax provision
of 16% during the nine month period ended September 30, 2008 primarily due to
changes in the geographic distribution of the income and changes in non taxable
income. The difference between the income tax rates for the 2009 and 2008
periods and the statutory rate is primarily due to the existence of carried
forward net operating losses in the U.S. locations and earnings taxed in
countries that have rates lower than the United States.

28

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INTELLIGROUP, INC.

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

Results of Operations  Consolidated
 Three month period ended September 30, 2009 compared to three month period
ended September 30, 2008.

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

Percentage of RevenueThree months period ended Sep
    30,2009
    
    2008Revenue
    
    100.0
    %
    
    100.0
    %Cost of
      Revenues
    
    65.4
    
    
    68.7Gross Profit
    
    34.6
    
    
    31.3Selling general and
      administrative expenses
    
    21.5
    
    
    21.4Depreciation and
      amortization
    
    1.7
    
    
    0.5Total operating expenses
    
    23.2
    
    
    21.9Operating income
    
    11.4
    
    
    9.4Interest income
    
    0.1
    
    
    0.2Interest expense
    
    (0.1
    )
    
    (0.2
    )Foreign currency transaction gain (loss), net
    
    0.1
    
    
    (1.5
    )Other income (expense),
      net
    
    1.3
    
    
    (0.2
    )Income before income
      tax provision
    
    12.8
    
    
    7.7Income tax provision
    
    1.6
    
    
    1.2Net income
    
    11.2
    %
    
    6.5
    %


Three month period ended September
30, 2009 compared to three month period ended September 30, 2008.

Revenue: Revenue has decreased by 23%
for the three month period ended September 30, 2008 as compared to the three
month period ended September 30, 2009. The decrease was due to the impact of the
challenging global economic environment. Despite adding 28 new customers during
the three month period ended September 30, 2009, the volume of our business
declined as our customers and prospective customers deferred the decision-making
on a range of IT services initiatives, particularly shorter-term
projects.Due
to the decline in customer demand competitive pressures resulted in downward
pressure on pricing. Our on site rates reduced by 6% from an average rate of
$108 during the three month period ended September 30, 2008 to an average rate
of $101 during the three month period ended September 30, 2009. Off shore rates
were reduced by 6% from an average rate of $24 during the three month period
ended September 30, 2008 to an average rate of $23 during the three month period
ended September 30, 2009. Recently, however, we have seen signs that the market
for IT services have begun to stabilize and therefore we are not expecting
further significant declines in revenues on a sequential basis.

29

---

INTELLIGROUP, INC.

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

Cost
of revenue and gross profit: The cost of
revenue has decreased by 26.8% from $28.3 million for the three month period
ended September 30, 2008 to $20.7 million for the three month period ended
September 30, 2009. The decrease was attributable to the decrease in payroll
costs by 12% due to decrease in the headcount and the related compensation
costs, decrease in sub-contractors cost by 5.1% due to reduction in the
headcount of sub-contractors, decrease in project related expenses by 7.5% due
to decline in volume of services sold and decrease by 2.2% due to fluctuations
in the functional currencies of the subsidiaries. The gross profit has decreased
by 14.7% from $12.9 million for the three month period ended September 30, 2008
to $11 million for the three month period ended September 30, 2009. The decrease
in gross profit was a result of the decrease in the revenues partially offset by
the cost savings during the three month period ended September 30, 2009. Gross
margin has increased from 31.3% for the three month
period ended September 30, 2008 to 34.6% million for the three month period
ended September 30, 2009. The increase in gross margin was due to improvement in
utilization rate by 8%. The cost of revenue has decreased by 26.8% as opposed to
a decrease in revenue by 23%, thereby contributing to an increase in gross
margin.Selling, general and administrative
expenses: Selling, general and administrative
expenses primarily consist of salaries and related benefits for sales and
general administrative personnel, facilities costs, related travel and
entertainment and professional fees. Selling, general and administrative
expenses have decreased by 22.6% from $8.8 million for the three month period
ended September 30, 2008 to $6.8 million for the three month period ended
September 30, 2009. The decrease in selling, general and administrative expenses
was due to (i) reduction in sales commission and payroll expenses by 13.1% on
account of reduction in head count and revenue during the period, (ii) operating
lease rentals and maintenance by 3% due to relocation of the office facility,
(iii) fluctuations in the functional currencies of the subsidiaries by 1.9%, and
(iv) other advertising, insurance and general expenses have decreased by 4.6% in
line with the decrease in the business of the Company.

Depreciation and amortization expenses:The Company recorded depreciation and amortization expenses of $0.6
million for the three month period ended September 30, 2009 as compared to $0.2
million the three month period ended September 30, 2008. The increase was due to
finalization of the purchase price allocation relating to the Novasoft
acquisition in September 2008 as a result of which the Company reversed excess
amortization of $0.4 million in September 2008 due to decrease in the fair value
of the intangibles acquired.

Interest Expense:For the three month
period ended September 30, 2009 and 2008, the company recorded $0.02 million and
$0.07 million towards interest expense. The decrease in interest expense was due
to repayment of the borrowings from the line of credit in 2008 respectively.

*Foreign Currency gain
(loss):*For the three month period ended
September 30, 2009, the Company recorded foreign currency transaction gains of
approximately $0.03 million, as compared to transaction losses of approximately
$0.7 million recorded for the three month period ended September 30, 2008. The
loss recorded during the three month period ended September 30, 2008 was due to
marked to market valuation of the outstanding derivative instruments consequent
to significant fluctuations in Indian Rupee (INR) and US Dollar (USD). The
gain during the three month period ended September 30, 2009 was primarily due to
strengthening of INR against USD.

*Interest and Other
Income:*Interest and other income was
approximately $0.4 million for the three month period ended September 30, 2009
as compared to $0.02 million for the three month period ended September 30,
2008. The increase is mainly due to increase in the market valuation of
non-convertible debentures.

Income tax provision:The Company recorded an
income tax provision of $0.5 million on a pretax income of $4.1 million for the
three month period ended September 30, 2009 as compared to an income tax
provision of $0.5 million on a pretax income of $3.2 million for the three month
period ended September 30, 2008. The effective tax rate has decreased to a tax
provision of 12% during the three month period ended September 30, 2009 from a
tax provision of 14% during the three month period ended September 30, 2008
primarily due to changes in the geographic distribution of the income. The
difference between the income tax rates for the 2009 and 2008 periods and the
statutory rate is primarily due to the existence of carried forward net
operating losses in the U.S. locations and earnings taxed in countries that have
rates lower than the United States.

Results of Operations by Business
Segment

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

30

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INTELLIGROUP, INC.

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

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

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

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

Nine month period ended September 30,
2009 Compared to Nine month period ended September 30, 2008.

The following discussion compares
the segment results of operations for the nine month period ended September 30,
2009 and 2008.

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

|                           |  | Nine months period ended September
      30,
|-------------------------- |  | --------------------------------------------
|                           |  | 2009                                        
|                           |  |                                             
|                           |  | Revenues                                    
|United States              |  | $                                           
|India                      |  |                                             
|Europe                     |  |                                             
|Japan                      |  |                                             
|Inter-segment eliminations |  |                                             
|Total                      |  | $                                           

US revenue has decreased by 24.7%
from $93.7 million for the nine month period ended September 30, 2008 to $70.6
million for the nine month period ended September 30, 2009. The decrease in
revenue was primarily due to impact of the challenging global economic
environment, due to which many of our customers and prospective customers
deferred the decision-making on a range of IT services initiatives, particularly
shorter-term projects.Operating income for US segment increased by 59.9% from $2.8
million for the nine month period ended September 30, 2008 to $4.5 million for
the nine month period ended September 30, 2009 due to reduction in payroll and
subcontracting cost by 22%, project related and travel costs by 45% and
marketing and administrative expenses by 32% as compared to the nine month
period ended September 30, 2008. These cost savings were partially offset by
24.7% reduction in revenues.

31

---

INTELLIGROUP, INC.

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

India revenue has decreased by 28%
from $34.9 million for the nine month period ended September 30, 2008 to $25.2
million for the nine month period ended September 30, 2009. The decrease in
revenues was attributable to global economic slowdown which resulted in
decreased demand for our off shore services, particularly from customers in the
US market and reduced demand during the period from customers in the local
geographic markets which our India subsidiary services. Off shore revenues
decreased by 34% while revenues from local geographic markets decreased by 26%
as compared to the nine month period ended September 30, 2008. In addition to
the decrease in the volume of services sold, increased competition has resulted
in downward pressure on bill rates for our off shore services. Our off shore
rates reduced by 7% from an average rate of $23.3 during the nine month period
ended September 30, 2008 to an average rate of $21.6 during the nine month
period ended September 30, 2009. Operating income for India segment decreased by
54.3% from $4.6 million for the nine month period ended September 30, 2008 to
$2.1 million for the nine month period ended September 30, 2009. The decrease in
operating income resulted from the decrease in revenue by 28% which was
partially off set by decrease in payroll and subcontracting costs by 20%,
project related and travel costs by 38% and marketing and administrative
expenses by 26%.

Europe revenue has increased by 6%
from $14.3 million for the nine month period ended September 30, 2008 to
$15.1million for the nine month period ended September 30, 2009. The marginal
increase in revenue is due to the start of one major customer project during the
period partially offset by decrease in revenues due to strengthening of the U.S.
Dollar against British Pound in particular by 26%. Operating income for Europe
segment increased by $1.4 million from $0.7 million for the nine month period
ended September 30, 2008 to $2.1 million for the nine month period ended
September 30, 2009. The increase in operating income is attributable due to
decrease in payroll and subcontracting costs by 17%, project related and travel
costs by 22% and marketing and administrative expenses by 15% as compared to the
nine month period ended September 30, 2008. In addition, as explained above,
there was also an increase in the segment revenues by 6%.

Japan
revenue has decreased by 20.1% from $3.9 million for the nine month period ended
September 30, 2008 to $3.1 million for the nine month period ended September 30,
2009. Japan reported income of 0.1million during the nine month period ended
September 30, 2008 where as it reported an operating loss of $0.4 million during
the nine month period ended September 30, 2009. The operating loss situation
during the nine month period ended September 30, 2009 was due to decrease in
revenues in the local Japanese market and Japan location was unable to quickly
counter the drop in revenues by implementing cost saving measures.

Three month period ended September
30, 2009 Compared to Three month period ended September 30, 2008.

The following discussion compares
the segment results of operations for the three month period endedSeptember 30, 2009and 2008.

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

|                           |  | Three months period ended September
      30,
|-------------------------- |  | ---------------------------------------------
|                           |  | 2009                                         
|                           |  |                                              
|                           |  | Revenues                                     
|United States              |  | $                                            
|India                      |  |                                              
|Europe                     |  |                                              
|Japan                      |  |                                              
|Inter-segment eliminations |  |                                              
|Total                      |  | $                                            

32

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INTELLIGROUP, INC.

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

US revenue has decreased by 26.8%
from $33.2 million for the three month period ended September 30, 2008 to $24.3
million for the three month period ended September 30, 2009. The decrease in
revenue was primarily due to impact of the challenging global economic
environment, due to which many of our customers and prospective customers
deferred the decision-making on a range of IT services initiatives, particularly
shorter-term projects.Operating income for US segment increased by 55.5% from $1.6
million for the three month ended September 30, 2008 to $2.5 million for the
three month period ended September 30, 2009, primarily due to reduction in
payroll and subcontracting costs by 27%, project related and travel costs by 38%
and marketing and administrative expenses by 36% which was partially offset by
decrease in revenues by 26.8%.

India revenue has decreased by 32.7%
from $12.2million for the three month period ended September 30, 2008 to $8.2
million for the three month period ended September 30, 2009. The decrease in
revenues was attributable to global economic slowdown which resulted in
decreased demand for our off shore services, particularly from customers in the
US market and reduced demand during the period from customers in the local
geographic markets which our India subsidiary services. Off shore revenues
decreased by 32% while revenues from local geographic markets decreased by 37%
as compared to the three month period ended September 30, 2009. In addition to
the decrease in the volume of services sold, increased competition has resulted
in downward pressure on bill rates for our off shore services. Our Off shore
rates reduced by 6% from an average rate of $24 during the three month period
ended September 30, 2008 to an average rate of $23 during the three month period
ended September 30, 2009. Operating income for the India segment has decreased
by 70.1% from $1.9 million for the three month ended September 30, 2008 to $0.6
million for the three month period ended September 30, 2009 due to decrease in
revenues by 32.7% which was partially off set by decrease in payroll and
subcontracting expenses by 25%, project related and travel costs by 39% and
marketing and administrative expenses by 16%.

Europe revenue has increased by
15.1% from $4.5 million for the three month period ended September 30, 2008 to
$5.1 million for the three month period ended September 30, 2009. The increase
in revenue is primarily due to the start of one major customer project in the
beginning of 2009 partially offset by decrease in revenues due to strengthening
of the U.S. Dollar against British Pound in particular by 18%. Operating income
for UK segment increased by 408.6% from $0.1 million for the three month period
ended September 30, 2008 to $0.7 million for the three month period ended
September 30, 2009. The increase in operating income was due to decrease in
payroll and subcontracting expenses by 2%, marketing and administrative expenses
by 3% coupled by an increase in revenues by 15.1% as explained above.

Japan
revenue decreased by 10.2% from $1.1 million for the three month period ended
September 30, 2008 to $1.0 million for the three month period ended September
30, 2009. Japan reported operating income of 0.2 million during the three month
period ended September 30, 2008 where as it reported an operating loss of
$0.1million during the three month period ended September 30, 2009. This was due
to decrease in revenues in the local Japanese market and Japan location was
unable to quickly counter the drop in revenues by implementing cost saving
measures.

Liquidity and Capital Resources

Cash Position and Cash Flows

We had cash and cash equivalents of
$20.9 million as at September 30, 2009 net of amounts outstanding against the
line of credit as compared to $10 million as at December 31, 2008. We had a
working capital of $32.1 million at September 30, 2009 and $25.1 million as at
December 31, 2008.

Cash
generated from operating activities was $14 million for the nine month period
ended September 30, 2009, resulting from the net income of $7.5 million for the
period and increase by $7.2 million due to realization of accounts receivable
and unbilled services balances, as the Company has worked to increase efficiency
in its billing and collections processes, partially offset by a decrease in
other net operating assets by $0.7 million. Cash generated from operating
activities was $5.3 million for the nine month period ended September 30, 2008
resulting mainly from the net income of $5.7 million for the period, partially
off set by a decrease in net operating assets by $0.4 million.

33

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INTELLIGROUP, INC.

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

The Company invested $0.8 million in
net purchase of computer equipment, internal-use computer software and office
furniture, fixtures and leasehold improvements for the nine month period ended
September 30, 2009 while it was $0.7 million for the nine month period ended
September 30, 2008. Net cash used for short term investments was $0.6 million
during the nine month period ended September 30, 2009 while there were no such
activities during the nine month period ended September 30, 2008.

Cash used
in financing activities was $1.9 million during the nine month period ended
September 30, 2009 as compared to $4 .0 million during the nine month period
ended September 30, 2008. The Company repurchased stock amounting to $1.8
million during the nine month period ended September 30, 2009 while the
borrowings of $3.4 million from the line of credit were repaid during the nine
month period ended September 30, 2008.

Credit Facility

On May 22, 2008, the Company and its
wholly-owned subsidiary Empower, Inc. closed out the existing $15 million line
of credit with Steel City Capital Funding. Concurrently, the Company entered
into a revolving credit loan and security agreement (Credit Agreement) with
HSBC Bank, (the Bank). The Credit Agreement is comprised of a three year
revolving line of credit pursuant to which the Company can borrow up to $10.0
million at the Banks Base Rate (as defined in the Credit Agreement) of 3.25% as
of September 30, 2009, minus 0.85%. The credit facility is collateralized by
substantially all of the assets of the United States based operations and all
subsidiary stock (not to exceed 65% of the Equity Interests of any Foreign
Subsidiary). The maximum borrowing availability under the Credit Agreement is
based upon a percentage of eligible billed and unbilled accounts
receivable.

The
Credit Agreement provides for certain financial covenants that shall only be
tested as of the end of any fiscal quarter.

The Company was in compliance with
the applicable financial covenants of the loan agreement related to the Credit
Agreement as of September 30, 2009.

As of September 30, 2009, the
Company had approximately $0.1 million outstanding borrowings under the Credit
Agreement. The Company estimates undrawn availability under the Credit Facility
to be $9.9 million as of September 30, 2009.

Cash to Fund Operating Activities

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

The
Companys 2009 operating plan contains assumptions regarding revenue and
expenses. The achievement of the operating plan depends heavily on the timing of
work performed by the Company on existing projects and the ability of the
Company to gain and perform work on new projects. Project cancellations, delays
in the timing of work performed by the Company on existing projects or the
inability of the Company to gain and perform work on new projects, or ability to
timely collect cash from its customers could have an adverse impact on the
Companys ability to execute its operating plan and maintain adequate cash flow.
In the event actual results do not meet the operating plan, management believes
it could execute contingency plans to mitigate such effects. Such plans include
reductions in capital expenditures and operating costs, and/or seeking
additional financing. Assuming that the Company achieves the revenue and expense
targets included in the Companys operating plan, management believes that the
Companys cash on hand and cash generated by operations and borrowings under its
credit facility will be sufficient to fund the Companys current and planned
operations through at least the next twelve months.

34

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INTELLIGROUP, INC.

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

Contractual Obligations and Other
Commercial Commitments

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

Recent Accounting Pronouncements

Effective
July 1, 2009, we adopted the Financial Accounting Standards Board (FASB)
Accounting Standards Codification (ASC) 105-10,Generally Accepted Accounting Principles  Overall(ASC 105-10). ASC 105-10 establishes theFASB Accounting Standards Codification(the Codification) as the source of authoritative accounting
principles recognized by the FASB to be applied by nongovernmental entities in
the preparation of financial statements in conformity with U.S. GAAP. Rules and
interpretive releases of the SEC under authority of federal securities laws are
also sources of authoritative U.S. GAAP for SEC registrants. All guidance
contained in the Codification carries an equal level of authority. The
Codification superseded all existing non-SEC accounting and reporting standards.
All other non-grandfathered, non-SEC accounting literature not included in the
Codification is non-authoritative. The FASB will not issue new standards in the
form of Statements, FASB Staff Positions or Emerging Issues Task Force
Abstracts. Instead, it will issue Accounting Standards Updates (ASUs). The FASB
will not consider ASUs as authoritative in their own right. ASUs will serve only
to update the Codification, provide background information about the guidance
and provide the bases for conclusions on the change(s) in the Codification.
References made to FASB guidance throughout this document have been updated for
the Codification.

The
Company elected a partial deferral of ASC 820-10 (previously SFAS No 157)
related to the measurement of fair value used when evaluating goodwill, other
intangible assets, and other long-lived assets for impairment. We adopted the
provisions of this statement for non-financial assets and liabilities effective
January 1, 2009. This adoption did not have impact on its Consolidated Financial
statements.

In
December 2007, the FASB issued ASC 805 Business Combinations (previously SFAS
141R). ASC 805 establishes principles and requirements for how an acquirer
recognizes and measures in its financial statements the identifiable assets
acquired, the liabilities assumed, any non controlling interest in the acquiree
and the goodwill acquired. ASC 805 also establishes disclosure requirements to
enable the evaluation of the nature and financial effects of the business
combination. This statement was adopted beginning January 1, 2009. There was no
significant impact on the Companys financial position or results of operations
as a result of the adoption of ASC 805.

In March
2008, the FASB issued ASC 815 (previously SFAS No. 161), Disclosures about
Derivative Instruments and Hedging Activities, which requires additional
disclosures about the objectives of using derivative instruments, the method by
which the derivative instruments and related hedged items are accounted for and
its related interpretations, and the effect of derivative instruments and
related hedged items on financial position, financial performance, and cash
flows. ASC 815 also requires disclosure of the fair values of derivative
instruments and their gains and losses in a tabular format. ASC 815 is effective
for financial statements issued for fiscal years and interim periods beginning
after November 15, 2008, with early adoption encouraged. The Company adopted
this standard effective January 1, 2009. The implementation of this standard did
not have a material impact on our consolidated financial statements. (Please see
Note 10 below for the expanded disclosure regarding derivative instruments in
accordance with the pronouncement).

In April
2009, the FASB issued ASC 320-10 (previously FSP SFAS 115-2 and FAS 124-2),
Recognition and Presentation of Other-Than-Temporary Impairments. This FSP
amends the other-than-temporary impairment guidance for debt securities to make
the guidance more operational and to improve the presentation and disclosure of
other-than-temporary impairments in the financial statements. The most
significant change the FSP brings is a revision to the amount of
other-than-temporary loss of a debt security recorded in earnings. The Company
adopted this standard effective April 1, 2009. The implementation of this
standard did not have a material impact on our consolidated financial
statements.

35

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INTELLIGROUP, INC.

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

In April
2009, the FASB issued ASC 820-10 (previously FSP SFAS 157-4), Determining Fair
Value When the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That Are Not Orderly. This
FSP provides additional guidance for estimating fair value, Fair Value
Measurements, when the volume and level of activity for the asset or liability
have significantly decreased. This FSP also includes guidance on identifying
circumstances that indicate a transaction is not orderly. This FSP emphasizes
that even if there has been a significant decrease in the volume and level of
activity for the asset or liability and regardless of the valuation technique(s)
used, the objective of a fair value measurement remains the same. Fair value is
the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction (that is, not a forced liquidation or
distressed sale) between market participants at the measurement date under
current market conditions. The Company adopted this standard effective April 1,
2009. The implementation of this standard did not have a material impact on our
consolidated financial statements.

In April
2009, the FASB issued ASC 825-10 (previously FSP FAS 107-1 and APB 28-1),
Interim Disclosures about Fair Value of Financial Instruments. Disclosures about
Fair Value of Financial Instruments require disclosures about fair value of
financial instruments for interim reporting periods of publicly traded companies
as well as in annual financial statements. The Company adopted this standard
effective April 1, 2009. (Please see Note 10 below for the expanded disclosure
on the fair value of financial instruments in accordance with the
pronouncement).

In May
2009, the FASB issued ASC 855 (previously SFAS No. 165), Subsequent. ASC 855
established general standards of accounting for the disclosure of events that
occur after the balance sheet date but before financial statements are issued or
are available to be issued. The adoption of ASC 855 required us to disclose the
date through which we have evaluated subsequent events and whether that date is
the date the financials were issued. The Company adopted this standard effective
April 1, 2009. (Please see Note 14 below for the disclosure on subsequent events
in accordance with the pronouncement).

In August
2009, the Financial Accounting Standards Board (FASB) issued Accounting
Standards Update (ASU) No. 2009-05, Measuring Liabilities at Fair Value
(ASU 2009-05). The amendments in this ASU apply to all entities that measure
liabilities at fair value and provides clarification that in circumstances in
which a quoted price in an active market for the identical liability is not
available, an entity is required to measure fair value using one or more
techniques laid out in this ASU. The guidance provided in this ASU is effective
for the first reporting period (including reporting periods) beginning after
issuance. The Company does not expect the adoption of this ASU to have a
material impact on its consolidated financial statements.

In
October 2009, the FASB issued ASU 2009-13, Multiple-Deliverable Revenue
Arrangements, (amendments to FASB ASC Topic 605, Revenue Recognition) (ASU
2009-13). ASU 2009-13 requires entities to allocate revenue in an arrangement
using estimated selling prices of the delivered goods and services based on a
selling price hierarchy. The amendments eliminate the residual method of revenue
allocation and require revenue to be allocated using the relative selling price
method. ASU 2009-13 is effective on a prospective basis for revenue arrangements
entered into or materially modified in fiscal years beginning on or after June
15, 2010, with early adoption permitted. ASU 2009-13 will become effective for
the Company with its fiscal year beginning January 1, 2011.

36

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INTELLIGROUP, INC.

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

Business Outlook

Our
business and financial condition depend on the health of the general economy, as
well as the demand for information technology services, particularly in the
United States as we derive a significant portion of our revenue from customers
located in the United States. Our revenue and profits are driven by demand for
our services. We continue to be impacted by the challenging global economic
environment, which led many companies to defer decision-making on a range of IT
services projects, particularly affecting smaller, shorter-term projects where
we have primarily focused our efforts in order to develop inroads with new
customers. We have seen the impact of such decline in demand for our services as
reflected by the 22% year over year decline in our revenue.

Despite the continuation of a very
challenging business environment, we are seeing some encouraging signs in the
overall IT services sector, including a greater degree of receptiveness from
many of our customers and prospects to discuss new or expanded initiatives and
many customers in the small and mid market are looking to engage IT service
firms as strategic partners for future projects. The Company won 28 new
customers during the three month period ended September 30, 2009. The total
value of the new contracts entered into during the three month period ended
September 30, 2009, including new engagements from existing customers was
approximately $20.9 million. While these were generally smaller initial
engagements, we believe that the market for IT services is stabilizing across
many industry sectors in which we work with the exception of our customers and
prospects in the consumer products and manufacturing sectors continued to
exhibit challenged demand on a sequential basis.

During
this challenging economic period our management team has focused its efforts on
improvements in its operational performance and aligning our cost structure to
current market conditions. To date, we have been able to effectively manage our
cost structure to stabilize and even achieve marginal growth in our operating
income, despite the drop in revenue, which was $8.3 million for the nine month
ended September 30, 2009 compared with $8.2 million for the nine month ended
September 30, 2008. However, if the current downturn in worldwide economic
conditions continues or economic conditions worsen, particularly in the United
States and the stabilization we have seen recently in market demand for our IT
services reverses, we may not be able to continue to reduce costs to a level
sufficient to minimize the impact of any possible further revenue declines on
our operating income and any of these events could materially and adversely
impact our business, financial condition and results of operations.

Item 3. Quantitative and Qualitative
Disclosures about Market Risk.

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

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

We are
responsible for maintaining disclosure controls and procedures designed to
ensure that information required to be disclosed in our Exchange Act reports is
recorded, processed, summarized and reported within the time periods specified
in the SECs rules and regulations, and that such information is accumulated and
communicated to our management, including our chief executive officer and chief
financial officer, as appropriate, to allow for timely decisions regarding
required disclosures. Our management, with the participation of our Chief
Executive Officer and Chief Financial Officer, evaluated the effectiveness of
our disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) under the Exchange Act) as of the end of the period covered by this
report. In designing and evaluating our disclosure controls and procedures,
management recognized that any controls and procedures, no matter how well
designed and operated, can provide only reasonable assurance of achieving their
objectives and management necessarily is required to apply its judgment in
evaluating the cost-benefit relationship of possible controls and procedures and
implementing controls and procedures based upon the application of managements
judgment. Based on such evaluation, our principal executive officer and
principal financial officer have concluded that, as of September 30, 2009, our
disclosure controls and procedures were effective as defined in Rules 13a-15(e)
and 15d-15(e) under the Exchange Act.

Changes in Internal Controls

There were no changes in our
internal control over financial reporting during the quarter ended September 30,
2009 that materially affected or are reasonably likely to materially affect, our
internal control over financial reporting.

37

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INTELLIGROUP, INC.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

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

Item 1a. Risk Factors

There have been no material changes
to our risk factors previously disclosed in our annual report on Form 10-K/A for
the period ended December 31, 2008.

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

|ISSUER
      REPURCHASE OF EQUITY SECURITIES
|--------------------------------------------
|                                            
|                                            
|                                            
|                                            
|Period                                      
|Jul 1 to Jul 31 2009                        
|Aug 1 to Aug 31 2009                        
|Sep 1 to Sep 30
      2009                  

Share
Repurchase Program

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

Item 3. Defaults Upon Senior
Securities

There are no matters to report
subject to this Item for the period ended September 30, 2009.

38

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INTELLIGROUP, INC.

PART II. OTHER INFORMATION
(Continued)

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

There are no
matters to report subject to this Item for the period ended September 30, 2009.

Item 5. Other Information

There are no matters to report subject to this Item for the period ended
September 30, 2009.

Item 6. Exhibits

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

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INTELLIGROUP, INC.

EXHIBIT INDEX

|Exhibit No. |   | Description of Exhibit |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|----------- | - | ---------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2           |   |                        | Agreement and Plan of Merger of the Company and its wholly owned
      subsidiary Oxford Systems Inc. dated December 2, 1996 (Incorporated by
      reference to the Company's Annual Report on Form 10-KSB for the year ended
      December 31, 1996.)                                                                                                                                                                                                                                                                          
|           
|3.1         |   |                        | Amended and Restated Certificate of Incorporation dated December
      27, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|           
|3.2         |   |                        | Amended and Restated Bylaws. (Incorporated by reference to the
      Company's Registration Statement on Form SB-2 (Registration Statement No.
      333-5981) declared effective on September 26, 1996.)                                                                                                                                                                                                                                                                                                                         
|           
|4.1         |   |                        | Shareholder Protection Rights Agreement dated as of November 6,
      1998, between the Company and American Stock Transfer & Trust Company
      which includes (I) the Form of Rights Certificate and (ii) the Certificate
      of Amendment to the Amended and Restated Certificate of Incorporation of
      Intelligroup, Inc. (Incorporated by reference to Exhibit No. 4.1 of the
      Company's Report on Form 8-K dated November 9, 1998, filed with the
      Securities and Exchange Commission on November 9, 1998.)
|           
|4.2         |   |                        | Amendment dated September 29, 2004 to the Shareholder Protection
      Rights Agreement dated November 6, 2004. (Incorporated by reference to
      Exhibit No. 4.1 of the Companys Report on Form 8-K dated September 29,
      2004, filed with the Securities and Exchange Commission on October 5,
      2004.)                                                                                                                                                                                                              
|           
|10.1        | * |                        | Amendment No. 5 to employment agreement between Vikram Gulati and
      Intelligroup, Inc. (Incorporated by reference to Exhibit 10.1 of the
      Companys current report on Form 8-K dated July 21, 2009, filed with the
      Securities and Exchange Commission on July 21, 2009).                                                                                                                                                                                                                                           
|           
|10.2        |  |                        | Lease agreement dated August 1, 2005 between Intelligroup Asia Pvt
      Ltd., and I Labs Hyderabad Technology Center Pvt Ltd.                                                                                                                                                                                                                                                                                                                                                                                                    
|           
|10.3        |  |                        | Lease agreement dated September 1, 2008 between Intelligroup Inc.
      and 5 Independence SPE LLC.                                                                                                                                                                                                                                                                                                                                                                                                                               
|           
|31.1        |  |                        | Certifications of Chief Executive Officer Pursuant to Rule
      13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002                                                                                                                                                                                                                                                                                                                                                                            
|           
|31.2        |  |                        | Certifications of Chief Financial Officer Pursuant to Rule
      13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002                                                                                                                                                                                                                                                                                                                                                                            
|           
|32.1        |  |                        | Certifications of Chief Executive Officer Pursuant to 18 U.S.C.
      Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
      of 2002                                                                                                                                                                                                                                                                                                                                                                    
|           
|32.2        |  |                        | Certifications of Chief Financial Officer Pursuant to 18 U.S.C.
      Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
      of 2002                                                                                                                                                                                                                                                                                                                                                                    

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

Filed herewith. All other exhibits
previously filed.

40

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SIGNATURES

Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized this 13th day of November 2009.



|                              | INTELLIGROUP, INC.
|----------------------------- | ------------------
|                              |                   
|Date: November 13,
      2009 | By:               
|                              |                   
|                              |                   
|                              |                   
|                              |                   
|Date: November 13,
      2009 | By:               
|                              |                   
|                              |                   
|                              |                   

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