10-K

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TABLE OF CONTENTS
Item 8. Financial Statements and Supplementary Data.
1. Financial Statements

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

Form 10-K

þ	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 2009
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                                to

Commission File Number 001-33625

VIRTUSA CORPORATION
(Exact Name of Registrant as Specified in Its Charter)

Delaware
(State or Other Jurisdiction of
Incorporation or Organization) 04-3512883
(I.R.S. Employer
Identification Number)

2000 West Park Drive
Westborough, Massachusetts 01581
(508) 389-7300
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)

Securities registered pursuant to Section 12(b) of the Act:
Common Stock, $0.01 par value per share    The NASDAQ Stock Market LLC
Securities registered pursuant to Section 12(g) of the Act:
None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o    No: þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o    No: þ

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 þ    No: o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, 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). þ Yes    o No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

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. (Check one):

Large accelerated filer o Accelerated filer þ Non-accelerated filer o
(Do not check if a smaller reporting company) Smaller reporting company o

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

Yes o    No: þ

The aggregate market value of the registrant's voting and non-voting shares of common stock held by non-affiliates of the registrant on September 30, 2008, based on $6.51 per share, the last reported sale price on the NASDAQ Global Market on that date, was $83,939,061.

Indicate the number of shares outstanding of each of the issuer's class of common stock, as of May 26, 2009:

Class	Number of Shares
Common Stock, par value $0.01 per share	24,746,321

DOCUMENTS INCORPORATED BY REFERENCE

The registrant intends to file a definitive Proxy Statement for its 2009 annual meeting of stockholders pursuant to Regulation 14A within 120 days of the end of the fiscal year ended March 31, 2009. Portions of the registrant's Proxy Statement are incorporated by reference into Part III of this Form 10-K. With the exception of the portions of the Proxy Statement expressly incorporated by reference, such document shall not be deemed filed with this Form 10-K.

VIRTUSA CORPORATION

ANNUAL REPORT ON FORM 10-K
Fiscal Year Ended March 31, 2009

TABLE OF CONTENTS

		Page
PART I
Item 1.	Business		3
Item 1A.	Risk Factors		13
Item 1B.	Unresolved Staff Comments		35
Item 2.	Properties		35
Item 3.	Legal Proceedings		35
Item 4.	Submission of Matters to a Vote of Security Holders		35
PART II
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		36
Item 6.	Selected Financial Data		39
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations		40
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		58
Item 8.	Financial Statements and Supplementary Data		61
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		99
Item 9A.	Controls and Procedures		99
Item 9B.	Other Information		100
PART III
Item 10.	Directors, Executive Officers and Corporate Governance		101
Item 11.	Executive Compensation		101
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		101
Item 13.	Certain Relationships and Related Transactions, and Director Independence		101
Item 14.	Principal Accounting Fees and Services		101
PART IV
Item 15.	Exhibits and Financial Statement Schedules		102
Signatures			109
Exhibit Index			110

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Part I

This Annual Report on Form 10-K (the "Annual Report") contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the "safe harbor" created by those sections. These statements relate to, among other things, our expectations concerning our business strategy. Any statements about our expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. Some of the forward-looking statements can be identified by the use of forward-looking terms such as "believes," "expects," "may," "will," "should," "seek," "intends," "plans," "estimates," "projects," "anticipates," or other comparable terms. These forward-looking statements involve risk and uncertainties. We cannot guarantee future results, levels of activity, performance or achievements, and you should not place undue reliance on our forward-looking statements. Our actual results may differ significantly from the results discussed in the forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or strategic investments. Factors that might cause such a difference include, but are not limited to, those set forth in "Item 1A. Risk Factors" and elsewhere in this Annual Report. Except as may be required by law, we have no plans to update our forward-looking statements to reflect events or circumstances after the date of this report. We caution readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. You are advised, however, to consult any further disclosures we make on related subjects in our Form 10-Q and 8-K reports to the Securities and Exchange Commission (the "SEC").

Item 1.    Business.

Overview

Virtusa Corporation (the "Company", "Virtusa", "we", "us" or "our") is a global information technology services company. We use an offshore delivery model to provide a broad range of information technology ("IT") services, including IT consulting, technology implementation and application outsourcing. Using our enhanced global delivery model, innovative platforming approach and industry expertise, we provide cost-effective services that enable our clients to use IT to enhance business performance, accelerate time-to-market, increase productivity and improve customer service. Headquartered in Massachusetts, we have offices in the United States and the United Kingdom and global delivery centers in Hyderabad and Chennai, India and Colombo, Sri Lanka.

Our enhanced global delivery model leverages a highly-efficient onsite-to-offshore service delivery mix and proprietary tools and processes to manage and accelerate delivery, foster innovation and promote continual improvement. Our global service delivery teams work seamlessly at our client locations and at our global delivery centers in India and Sri Lanka to provide value-added services rapidly and cost-effectively. They do this by using our enhanced global delivery model, which we manage to a 20/80, or better, onsite-to-offshore service delivery mix.

We apply our innovative platforming approach across all of our services. We help our clients combine common business processes and rules, technology frameworks and data into reusable application platforms that can be leveraged across the enterprise to build, enhance and maintain existing and future applications. Our platforming approach enables our clients to continually improve their software platforms and applications in response to changing business needs and evolving technologies while also realizing long-term and ongoing cost savings.

We enable our clients to use IT to accelerate time-to-market, increase productivity and improve customer service. We are able to reduce costs through our enhanced global delivery model. We also reduce the effort and costs required to maintain and develop IT applications by streamlining and consolidating our clients' applications on an ongoing basis. We believe that our solution provides our clients with the consultative and high-value services associated with large consulting and systems integration firms, the

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cost-effectiveness associated with offshore IT outsourcing firms and ongoing benefits of our innovative platforming approach.

We provide our IT services primarily to enterprises engaged in the following industries: communications and technology; banking, financial services and insurance ("BFSI"); and media and information. Our current clients include leading global enterprises such as Aetna Life Insurance Company, British Telecommunications plc ("BT"), ING North America Insurance Corporation, International Business Machines Corporation, Iron Mountain Information Management, Inc., JPMorgan Chase Bank, N.A, Metavante Corporation and Thomson Reuters (Healthcare) Inc., and leading enterprise software developers such as Pegasystems Inc. We have a high level of repeat business among our clients. For instance, during the fiscal year ended March 31, 2009, 95% of our revenue came from clients to whom we had been providing services for at least one year. Our top ten clients accounted for approximately 73%, 76% and 72% of our total revenue in the fiscal years ended March 31, 2009, 2008 and 2007, respectively.

Our largest client, BT, accounted for 19% and 27% of our total revenue in the fiscal years ended March 31, 2009 and 2008, respectively. During the fiscal year ended March 31, 2009, Metavante Corporation and JPMorgan Chase Bank, N.A., accounted for 13% and 10%, respectively, of our total revenue. For the fiscal year ended March 31, 2008, no other clients accounted for more than 10% of our revenue.

Our solution

We deliver a broad range of IT services using an enhanced global delivery model and an innovative platforming approach. We have significant domain expertise in IT-intensive industries, including communications and technology, BFSI and media and information. We enable our clients to leverage IT to improve business performance, use IT assets more effectively and reduce IT costs.

Broad range of IT services.    We provide a broad range of IT services, either individually or as part of an end-to-end solution, from IT consulting and technology implementation to application outsourcing. Our IT consulting services include strategic activities such as defining technology roadmaps, providing architecture services and assessing application portfolios. Our technology implementation services include application development, systems integration and legacy system conversion and enablement. Our application outsourcing services include application enhancement, maintenance and infrastructure management.

Enhanced global delivery model.    We believe we have an enhanced and integrated global delivery model. Our enhanced global delivery model leverages a highly-efficient onsite-to-offshore service delivery mix and proprietary tools and processes to manage and accelerate delivery, foster innovation and promote continual improvement. We manage to a 20/80, or better, onsite-to-offshore service delivery mix, which allows us to provide value-added services rapidly and cost-effectively. During the past three fiscal years, we performed more than 80% of our total billable hours at our offshore global delivery centers. Our onsite client service teams comprise senior technical and industry experts, who work on an integrated basis with our offshore teams in India and Sri Lanka. We leverage our global delivery model across all of our service offerings.

Platforming approach.    We apply an innovative platforming approach across our IT consulting, technology implementation and application outsourcing services to reduce costs, increase productivity and improve the efficiency and effectiveness of our clients' IT application environments. As part of our platforming approach, we assess our clients' application environments to identify common elements, such as business processes and rules, technology frameworks and data. We incorporate those common elements into one or more application platforms that can be leveraged across the enterprise to build, enhance and maintain existing and future applications. Our platforming approach enables our clients to continually improve their software platforms and applications in response to changing business needs and evolving technologies while also realizing long-term and ongoing cost savings.

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Services

We provide a broad range of IT consulting, technology implementation and application outsourcing services to our clients, either individually or as part of an end-to-end solution.

IT consulting services

We provide IT consulting services to assist our clients with their continually-changing IT environments. Our goal is to help them to continually improve the effectiveness and efficiency of their IT application environments by adopting and evolving towards re-useable software platforms. We help clients analyze business and/or technology problems and identify and design platform-based solutions. We also assist our clients in planning their IT initiatives and transition plans.

Our IT consulting services include the following assessment and planning, architecture and design and governance-related services:

Assessment and Planning Services	Architecture and Design Services	Governance-Related Services
•  application inventory and portfolio assessment •  business/technology alignment analysis •  IT strategic planning •  quality assurance process consulting	•  enterprise architecture analysis •  technology roadmaps •  product evaluation and selection •  business process analysis and design	•  program governance and change management •  program management office planning •  IT process/methodology consulting

During our consulting engagements, we often leverage proprietary frameworks and tools to differentiate our services and to accelerate delivery. Examples of these frameworks and tools include our Strategic Enterprise Information Roadmap framework and our Business Process Visualization tools. We believe that our consulting services are also differentiated in that we are typically able to leverage our global delivery model for our engagements. Our onsite teams work directly with our clients to understand and analyze the current-state problems and to design the conceptual solutions. Our offshore teams work seamlessly with our onsite teams to design and expand the conceptual solution, research alternatives, perform detailed analyses, develop prototypes and proofs-of-concept and produce detailed reports. We believe that this approach reduces cost, allows us to explore more alternatives in the same amount of time and improves the quality of our deliverables.

Technology implementation services

Our technology implementation services involve building, testing and deploying IT applications, and consolidating and rationalizing our clients' existing IT applications and IT environments into platforms.

Our technology implementation services include the following development, legacy asset management, data warehousing and testing services:

Development Services	Legacy Asset Management Services	Data Warehousing Services	Testing Services
•  application development •  package implementation and integration •  software product engineering •  Business Process Management implementations •  Enterprise Content Management	•  systems consolidation and rationalization •  technology migration and porting •  web-enablement of legacy applications	•  data management and transformation •  business intelligence, reporting and decision support	•  testing frameworks •  automation of test data and cases •  test cycle execution

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Our technology implementation services are typically characterized by short delivery cycles, stringent service levels and evolving requirements. We have incorporated rapid, iterative development techniques into our approach, extensively employing prototyping, solution demonstration labs and other collaboration tools that enable us to work closely with our clients to understand and adapt to their changing business needs. As a result, we are able to develop and deploy applications quickly, often within solution delivery cycles of less than three months. We provide technology implementation services across Microsoft and Java-based, client-server and mainframe technologies.

Application outsourcing services

We provide a broad set of application outsourcing services that enable us to provide comprehensive support for our clients' software applications and platforms. We endeavor to continually improve the applications under our management and to evolve our clients' IT applications into leverageable platforms.

Our application outsourcing services include the following application and platform management, infrastructure management and quality assurance management services:

Application and Platform Management Services	Infrastructure Management Services	Quality Assurance Management Services
•  production support •  maintenance and enhancement of custom-built and package-based applications •  ongoing software engineering services for software companies	•  systems administration •  database administration •  monitoring	•  outsourcing of quality assurance planning •  preparation of test cases, scripts and data •  execution of test cases, scripts and data

We believe that our application outsourcing services are differentiated because they are based on the principle of migrating installed applications to flexible platforms that can sustain further growth and business change. We do this by:

•

developing a roadmap for the evolution of applications into platforms

•

establishing an ongoing planning and governance process for managing change

•

analyzing applications for common patterns and service

•

identifying application components that can be extended or enhanced as core components

•

integrating new functions, features and technologies into the target architecture

Platforming approach

Our platforming approach is embodied in a set of proprietary processes, tools and frameworks that addresses the fundamental challenges confronting IT executives. These challenges include the rising costs of technology ownership and the need to accelerate time-to-market, improve service and enhance productivity.

Our platforming approach draws from analogs in industries that standardize on platforms composed of common components and assemblies used across multiple product lines. Similarly, we work with our clients to evolve their diverse software assets into unified, rationalized software platforms. Our platforming approach leads to simplified and standardized software components and assemblies that work together harmoniously and readily adapt to support new business applications. For example, a software platform for trading, once developed within an investment bank, can be the foundation for the bank's diverse trading applications in equities, bonds and currencies. Our platforming approach stands in contrast to traditional enterprise application development projects, where different applications remain separate and isolated from each other, replicating business logic, technology frameworks and enterprise data.

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At the center of our platforming approach is a five-level maturity framework that allows us to adapt our service offerings to meet our clients' unique needs. Level 1 maturity in our platforming approach represents traditional applications where every line of code is embedded and unique to the application and every application is monolithic. Level 2 applications are less monolithic and more flexible and demonstrate characteristics such as configurability and customizability. Level 3 are advanced applications where the common code components and software assets are leveraged across multiple application families and product lines. Level 4 applications are framework-driven where the core business logic is reused with appropriate custom logic built around them. At the highest level of maturity are Level 5 applications, where platforms are greatly leveraged to simplify and accelerate application development and maintenance.

At lower levels of maturity, few assets are created and reused. Consequently, agility, total cost of ownership and ability to quickly meet client needs are sub-optimal. As organizations mature along this continuum, from Level 1 to Level 5, substantial intellectual property is created and embodied in software platforms that enable steady gains in agility, reduce overall cost of ownership and accelerate time-to-market.

Our platforming approach improves software quality and IT productivity. Software assets within platforms are reused across applications, their robustness and quality improves with time and our clients are able to develop software with fewer defects. A library of ready-made building blocks significantly enhances productivity and reduces software development risks compared to traditional methods. This establishes a cycle of continual improvement: the more an enterprise embraces platform-based solutions, the better the quality of its applications and the less the effort required to build, enhance and maintain them.

Global delivery model

We have developed an enhanced global delivery model that allows us to provide innovative IT services to our clients in a flexible, cost-effective and timely manner. Our model leverages an efficient onsite-to-offshore service delivery mix and our proprietary Global Innovation Process (GIP), to manage and accelerate delivery, foster innovation and promote continual improvement.

We manage to a highly-efficient 20/80, or better, onsite-to-offshore service delivery mix, which allows us to cost-effectively deliver value-added services and rapidly respond to changes in resources and requirements. During the past three fiscal years, we performed at least 80% of our total annual billable hours at our offshore global delivery centers. Using our global delivery model, we generally maintain onsite teams at our clients' locations and offshore teams at one or more of our global delivery centers. Our onsite teams are generally composed of program and project managers, industry experts and senior business and technical consultants. Our offshore teams are generally composed of project managers, technical architects, business analysts and technical consultants. These teams are typically linked together through common processes and collaboration tools and a communications infrastructure that features secure, redundant paths enabling seamless global collaboration. Our global delivery model enables us to provide around-the-clock, world-class execution capabilities that span multiple time zones.

Our enhanced global delivery model is built around our proprietary GIP, which is a software lifecycle methodology that combines our decade-long experience building platform-based solutions for global clients with leading industry standards such as Rational Unified Process, eXtreme Programming, Capability Maturity Model and Product Line Engineering. By leveraging GIP templates, tools and artifacts across diverse disciplines such as requirements management, architecture, design, construction, testing, application outsourcing and production support, each team member is able to take advantage of tried and tested software engineering and platforming best practices and extend these benefits to clients.

We have adapted and incorporated modern techniques designed to accelerate the speed of development into GIP, including rapid prototyping, agile development and eXtreme Programming. During the initial process-tailoring phase of an engagement, we work with the client to define the specific approach and tools that will be used for the engagement. This process-tailoring takes into consideration the client's business

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objectives, technology environment and currently-established development approach. We believe our innovative approach to adapting proven techniques into a custom process has been an important differentiator. For example, a large high-tech manufacturer engaged us to use our process-tailoring approach to design a common, standards-based development process for use by its own product development teams.

The backbone of GIP is our global delivery operations infrastructure. This infrastructure combines enabling tools and specialized teams that assist our project teams with important enabling services such as workforce planning, knowledge management, integrated process and program management and operational reporting and analysis.

Two important aspects of our global delivery model are innovation and continual improvement. A dedicated process group provides three important functions: they continually monitor, test and incorporate new approaches, techniques, tools and frameworks into GIP; they advise project teams, particularly during the process-tailoring phase; and they monitor and audit projects to ensure compliance. New and innovative ideas and approaches are broadly shared throughout the organization, selectively incorporated into GIP and deployed through training. Clients also contribute to innovation and improvement as their ideas and experiences are incorporated into our body of knowledge. We also seek regular informal and formal client feedback. Our global leadership and executive team regularly interacts with client leadership and each client is typically given a formal feedback survey on a quarterly basis. Client feedback is qualitatively and quantitatively analyzed and forms an important component of our teams' performance assessments and our continual improvement plans.

Sales and marketing

Our global sales, marketing and business development teams seek to develop strong relationships with managers and executives at prospective and existing clients to establish long-term business relationships that continue to grow in size and strategic value. As of March 31, 2009, we had 76 marketing and business development professionals, including sales managers, sales representatives, account managers, telemarketers, sales support personnel and marketing professionals.

The sales cycle for our services often includes initiating contact with a prospective client, understanding the prospective client's business challenges and opportunities, performing discovery or assessment activities, submitting proposals, providing client case studies and references and developing proofs-of-concept or solution prototypes. We organize our sales teams in strategic business units by geography and with professionals who have specialized industry knowledge. This industry focus enables our sales teams to better understand the prospective client's business and technology needs and to offer appropriate industry-focused solutions.

Sales and sales support.    Our sales and sales support teams focus primarily on identifying, targeting and building relationships with prospective clients. These teams are supported in their efforts by industry specialists, technology consultants and solution architects, who work together to design client-specific solution proposals. Our sales and sales support teams are based in offices throughout India, Sri Lanka, the United Kingdom and the United States.

Account management.    We assign experienced account managers who build and regularly update detailed account development plans for each of our clients. These managers are responsible for developing strong working relationships across the client organization, working day-to-day with the client and our service delivery teams to understand and address the client's needs. Our account managers work closely with our clients to develop a detailed understanding of their business objectives and technology environments. We use this knowledge to identify and target additional consulting engagements and other outsourcing opportunities.

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Marketing.    We maintain a marketing presence in India, Sri Lanka, the United Kingdom and the United States. Our marketing team seeks to build our brand awareness and generate target lists and sales leads through industry events, press releases, thought leadership publications, direct marketing campaigns and referrals from clients, strategic alliances and industry analysts. The marketing team maintains frequent contact with industry analysts and experts to understand market trends and dynamics.

Strategic alliances.    We have strategic alliances with software companies, some of which are also our clients, to provide services to their customers. We believe these alliances differentiate us from our competition. Our extensive engineering, quality assurance and technology implementation and support services to software companies enable us to compete more effectively for the technology implementation and support services required by their customers. In addition, our strategic alliances with software companies allow us to share sales leads, develop joint account plans and engage in joint marketing activities.

Clients and industry expertise

We market and provide our services primarily to companies in North America and Europe. For additional discussion regarding geographic information, see note 17 to our consolidated financial statements included elsewhere in this Annual Report. A majority of our revenue for the fiscal year ended March 31, 2009 was generated from Forbes Global 2000 firms or their subsidiaries. We believe that our regular, direct interaction with senior executives at these clients, the breadth of our client relationships and our reputation within these clients as a thought leader differentiates us from our competitors. The strength of our relationships has resulted in significant recurring revenue from existing clients. In the fiscal year ended March 31, 2009, 71% of our revenue came from clients who spent more than $5.0 million with us and 86% came from clients who spent more than $2.0 million with us. Our largest client, BT, accounted for 19% and 27% of our total revenue in the fiscal years ended March 31, 2009 and 2008, respectively. During the fiscal year ended March 31, 2009, Metavante Corporation and JPMorgan Chase Bank, N.A., also accounted for 13% and 10%, respectively, of our total revenue. For the fiscal year ended March 31, 2008, no other clients accounted for more than 10% of our revenue.

We focus primarily on three industries: communications and technology, BFSI and media and information. We build expertise in these industries through our customer experience and industry alliances, by hiring industry specialists and by training our business analysts and other team members in industry-specific topics. Drawing on this expertise, we strive to develop industry-specific perspectives and services.

Communications and technology.    For our communications clients, we focus on customer service, sales and billing functions and regulatory compliance and help them improve service levels, shorten time-to-market and modernize their IT environments. For our technology clients, which include hardware manufacturers and software companies, we provide a wide range of industry-specific service offerings, including product management services; product architecture, engineering and quality assurance services; and professional services to support product implementation and integration. These clients often employ cutting-edge technology and generally require strong technical skills and a deep understanding of the software product lifecycle.

Banking, financial services and insurance.    We provide services to clients in the retail, wholesale and investment banking areas; financial transaction processors; and insurance companies encompassing life, property-and-casualty and health insurance. For our BFSI clients, we have developed industry-specific services for each of these sectors, such as an account opening framework for banks, compliance services for financial institutions and customer self-service solutions for insurance companies. The need to rationalize and consolidate legacy applications is pervasive across these industries and we have tailored our platforming approach to address these challenges.

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Media and information.    For our media and information clients, we focus primarily on solutions involving electronic publishing, online learning, content management, information workflow and mobile content delivery as well as personalization, search technology and digital rights management. Many media and information providers are focused on building common platforms that provide customized content from multiple sources, customized and delivered to many consumers using numerous delivery mechanisms. We believe our platforming approach is ideally suited to these opportunities.

Competition

The IT services market in which we operate is highly competitive, rapidly evolving and subject to shifting client needs and expectations. This market includes a large number of participants from a variety of market segments, including:

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offshore IT outsourcing firms, such as Cognizant Technology Solutions Corporation, HCL Technologies Ltd., Infosys Technologies Limited, Patni Computer Systems Limited, Tata Consultancy Services Limited, Tech Mahindra Limited and Wipro Limited

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consulting and systems integration firms, such as Accenture Ltd., Cap Gemini S.A., Computer Sciences Corporation, Deloitte Consulting LLP, IBM Global Services Consulting and Sapient Corporation

We also occasionally compete with in-house IT departments, smaller vertically-focused IT service providers and local IT service providers based in the geographic areas where we compete. We expect additional competition from offshore IT outsourcing firms in emerging locations such as Eastern Europe, Latin America and China, as well as offshore IT service providers with facilities in less expensive geographies within India.

We believe that the principal competitive factors in our business include technical expertise and industry knowledge, a breadth of service offerings to provide one-stop solutions to clients, a well-developed recruiting, training and retention model, responsiveness to clients' business needs and quality of services. We believe that we compete favorably with respect to these factors. Many of our competitors, however, have significantly greater financial, technical and marketing resources and a greater number of IT professionals than we do. We cannot assure you that we will continue to compete favorably or that we will be successful in the face of increasing competition.

Human resources

We seek to maintain a culture of innovation by aligning and empowering our team members at all levels of our organization. Our success depends upon our ability to attract, develop, motivate and retain highly-skilled and multi-dimensional team members. Our people management strategy is based on six key components: recruiting, performance management, training and development, employee engagement and communication, compensation and retention. Although not currently a material component of our people management strategy, we also retain subcontractors at all of our locations on an as-needed basis for specific client engagements.

Recruiting.    Our global recruiting and hiring process addresses our need for a large number of highly-skilled, talented team members. In all of our recruiting and hiring efforts, we employ a rigorous and efficient interview process. We also employ technical and psychometric tests for our IT professional recruiting efforts in India and Sri Lanka. These tests evaluate basic technical skills, problem-solving capabilities, attitude, leadership potential, desired career path and compatibility with our team-oriented, thought-leadership culture.

We recruit from leading technical schools in India and Sri Lanka through dedicated campus hiring programs. We maintain a visible position in these schools through a variety of specialized programs, including IT curriculum development, classroom teaching and award sponsorships. We also recruit and

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hire laterally from leading IT service and software product companies and use employee referrals as a significant part of our recruitment process.

Performance management.    We have a sophisticated performance assessment process that evaluates team members and enables us to tailor individual development programs. Through this process, we assess performance levels, along with each team member's potential. We create and manage development plans, adjust compensation and promote team members based on these assessments.

Training and development.    We devote significant resources to train and integrate all new hires into our global team. We conduct a training program for all lateral hires that teaches them our culture and value system. We provide a comprehensive training program for our campus hires that combines classroom training with on-the-job learning and mentoring. We strive to continually measure and improve the effectiveness of our training and development programs based on team member feedback.

Employee engagement and communication.    We believe open communication is essential to our team-oriented culture. We maintain multiple communication forums, such as regular company-wide updates from senior management, complemented by team member sessions at the regional, local and account levels, as well as regular town hall sessions to provide team members a voice with management.

Compensation.    We consistently benchmark our compensation and benefits with relevant market data and make adjustments based on market trends and individual performance. Our compensation philosophy rewards performance by linking both variable compensation and salary increases to performance.

Retention.    To attract, retain and motivate our team members, we seek to provide an environment that rewards entrepreneurial initiative, thought leadership and performance. During the twelve months ended March 31, 2009, we experienced voluntary team member attrition at a rate of 22.9% and an involuntary attrition rate of 12.7%. We remain committed to improving and sustaining our voluntary attrition levels in-line with our long-term stated goals. We define attrition as the ratio of the number of team members who have left us during a defined period to the total number of team members that were on our payroll at the end of the period. Our human resources team, working with our business units, proactively manages voluntary team member attrition by addressing many factors that improve retention, including:

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providing team members with opportunities to handle challenging technical and organizational problems and learn our platforming approach

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providing team members with clear career paths, rotation opportunities across clients and domains and opportunities to advance rapidly

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providing team members opportunities to interact with our clients and help shape their IT strategy and solutioning

•

creating a strong peer group work environment that pushes our team members to succeed

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creating a climate where there is a free exchange of ideas cutting across organizational hierarchy

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creating a family-oriented work environment that is fun and engaging

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recognizing team performance through highly-visible team recognition awards

As of March 31, 2009, we had 3,764 team members worldwide. We also retain outside contractors from time to time to supplement our services on an as needed basis. None of our team members are covered by a collective bargaining agreement or represented by a labor union. We consider our relations with our team members to be good.

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Network and infrastructure

Our global IT infrastructure is designed to provide uninterrupted service to our clients. We use a secure, high-performance communications network to enable our clients' systems to connect seamlessly to each of our offshore global delivery centers. We provide flexibility for our clients to operate their engagements from any of our offshore global delivery centers by using mainstream network topologies, including site-to-site Virtual Private Networks, International Private Leased Circuits and MultiProtocol Label Switching. We also provide videoconferencing, voice conferencing and Voice over Internet Protocol capabilities to our global delivery teams and clients to enable clear and uninterrupted communication in our engagements, be it intra-company or with our clients.

We monitor our network performance on a 24x7 basis to ensure high levels of network availability and periodically upgrade our network to enhance and optimize network efficiency across all operating locations. We use leased telecommunication lines to provide redundant data and voice communication with our clients' facilities and among all of our facilities in Asia, the United States and the United Kingdom. We also maintain multiple sites across our global delivery centers in India and Sri Lanka as back-up centers to provide for continuity of infrastructure and resources in the case of natural disasters or other events that may cause a business interruption.

We have also implemented numerous security measures in our network to protect our and our clients' data, including multiple layers of anti-virus solutions, network intrusion detection, host intrusions detection and information monitoring. We are ISO 27001 certified and believe that we meet all of our clients' stringent security requirements for ongoing business with them.

Intellectual property

We believe that our continued success depends in part on the skills of our team members, the ability of our team members to continue to innovate and our intellectual property rights. We rely on a combination of copyright, trademark and design laws, trade secrets, confidentiality procedures and contractual provisions to protect our intellectual property rights and proprietary methodologies. It is our policy to enter into confidentiality agreements with our team members and consultants and we generally control access to and distribution of our proprietary information. These agreements generally provide that any confidential or proprietary information developed by us or on our behalf be kept confidential. We pursue the registration of certain of our trademarks and service marks in the United States and other countries. We have registered the mark "Virtusa" in the United States, the European Community and India and have filed for registration of "Virtusa" in Sri Lanka. We also have a registered service mark in the United States, "Productization," which we use to describe our methodology and approach to delivery services. We have no issued patents.

Our business also involves the development of IT applications and other technology deliverables for our clients. Our clients usually own the intellectual property in the software applications we develop for them. We generally implement safeguards designed to protect our clients' intellectual property in accordance with their needs and specifications. Our means of protecting our and our clients' proprietary rights, however, may not be adequate. Despite our efforts, we may be unable to prevent or deter infringement or other unauthorized use of our and our clients' intellectual property. Legal protections afford only limited protection for intellectual property rights and the laws of India and Sri Lanka do not protect intellectual property rights to the same extent as those in the United States and the United Kingdom. Time-consuming and expensive litigation may be necessary in the future to enforce these intellectual property rights.

In addition, we cannot assure you that our intellectual property or the intellectual property that we develop for our clients does not infringe the intellectual property rights of others, or will not in the future. If we become liable to third parties for infringing upon their intellectual property rights, we could be required to pay substantial damage awards and be forced to develop non-infringing technology, obtain licenses or cease delivery of the applications that contain the infringing technology.

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Business Segments and Geographic Information

We view our operations and manage our business as one operating segment. For information regarding net revenue by geographic regions for each of the last three fiscal years, see note 17 to our consolidated financial statements for the fiscal year ended March 31, 2009 contained in this Annual Report.

For information regarding risks and dependencies associated with foreign operations, see our risk factors listed in "Item 1A. Risk Factors" contained in this Annual Report.

Our corporate and available information

We were originally incorporated in Massachusetts in November 1996 as Technology Providers, Inc. We reincorporated in Delaware as eRunway, Inc. in May 2000 and subsequently changed our name to Virtusa Corporation in April 2002. Our principal executive offices are located at 2000 West Park Drive, Westborough, Massachusetts 01581, and our telephone number at this location is (508) 389-7300. Our website address is www.virtusa.com. We have included our website address as an inactive textual reference only. The information on, or that can be accessed through, our website is not part of this Annual Report. Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available free of charge through the investor relations page of our internet website as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission. In addition, we make available our Code of Business Conduct and Ethics free of charge through our website. We intend to disclose any amendments to, or waivers from, our Code of Business Conduct and Ethics that are required to be publicly disclosed pursuant to rules of the SEC and the NASDAQ Stock Market by filing such amendment or waiver with the SEC and posting it on our website.

No information on our Internet website is incorporated by reference into this Form 10-K or any other public filing made by us with the SEC.

Item 1A.Risk Factors.

We operate in a rapidly changing environment that involves a number of risks, some of which are beyond our control. This discussion highlights some of the risks which may affect future operating results. These are the risks and uncertainties we believe are most important for you to consider. Our operating results and financial condition have varied in the past and may vary significantly in the future depending on a number of factors. We cannot be certain that we will successfully address these risks. If we are unable to address these risks, our business may not grow, our stock price may suffer and/or we may be unable to stay in business. Additional risks and uncertainties not presently known to us, which we currently deem immaterial or which are similar to those faced by other companies in our industry or business in general, may also impair our business operations.

Except for the historical information in this Annual Report, the matters contained in this report include forward-looking statements that involve risks and uncertainties. The following factors, among others, could cause actual results to differ materially from those contained in forward-looking statements made in this report and presented elsewhere by management from time to time. Such factors, among others, may have a material adverse effect upon our business, results of operations and financial condition. You should consider carefully the following risk factors, together with all of the other information included in this Annual Report. Each of these risk factors could adversely affect our business, operating results and financial condition, as well as adversely affect the value of an investment in our common stock.

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Risks relating to our business

Our revenue is highly dependent on a small number of clients and the loss of, or material reduction in, revenue from any one of our major clients could significantly harm our results of operations and financial condition.

We have historically earned, and believe that over the next few years we will continue to earn, a significant portion of our revenue from a limited number of clients. For instance, we generated approximately 54%, 54% and 49% of our revenue in our fiscal years ended March 31, 2009, 2008 and 2007, respectively, from our top five clients during those periods. For the fiscal year ended March 31, 2009, BT, Metavante Corporation and JPMorgan Chase Bank, N.A. accounted for 19%, 13% and 10% of our total revenue, respectively. In addition, during the fiscal years ended March 31, 2009 and 2008, 95% and 96% of our revenue, respectively, came from clients to whom we had been providing services for at least one year. The loss of, or material reduction in revenue from, any one of our major clients could materially reduce our total revenue or delay our recognition of revenue, harm our reputation in the industry and/or reduce our ability to accurately predict cash flow. The loss of or material reduction in revenue from any one of our major clients could also adversely affect our gross profit and utilization as we seek to redeploy resources previously dedicated to that client. Generally, our clients retain us on a non-exclusive, engagement-by-engagement basis, rather than under exclusive long-term contracts and may terminate or reduce our engagements without termination related penalties. Accordingly, we cannot assure you that revenue from our major clients will not be significantly reduced in the future, including from factors unrelated to our performance or work product such as consolidation by or among our clients or the acquisition of a client. For instance, Metavante Corporation, one of our largest clients, recently announced that it has agreed to be acquired by Fidelity National Information Services, Inc., or FIS. We can make no assurance that, if the transaction closes, FIS will continue to purchase our services, or if continued, at the same or comparable levels as in previous years. Further, the loss of, or material reduction in revenue from, any one of our major clients has required, and could in the future require, us to initiate involuntary attrition. This could have a material adverse effect on our attrition rate and make it more difficult for us to attract and retain IT professionals in the future. We may not be able to maintain our client relationships and our clients may not renew their agreements with us, in which case, our business, financial condition and results of operations would be adversely affected. For instance, we and BT have amended our commercial agreement from time to time to reflect agreed upon changes to terms and conditions, some of which changes may have reduced the economic benefit to us of the agreement. There can be no assurance that the agreement will not be terminated or further amended prior to the end of its term, or that the depreciation of the U.K. pound sterling against the U.S. dollar will not reduce the aggregate size of the minimum commitment which is set forth in the agreement, when translated into U.S. dollars.

In addition, this client concentration may subject us to perceived or actual leverage that our clients may have, given their relative size and importance to us. If our clients seek to negotiate their agreements on terms less favorable to us and we accept such unfavorable terms, such unfavorable terms may have a material adverse effect on our business, financial condition and results of operations. Accordingly, unless and until we diversify and expand our client base, our future success will significantly depend upon the timing and volume of business from our largest clients and the financial and operational success of these clients. If we were to lose one of our major clients or have a major client cancel substantial projects or otherwise significantly reduce its volume of business with us, our revenue and profitability would be materially reduced and our business would be seriously harmed.

We depend on clients primarily located in the United States and the United Kingdom, as well as clients concentrated in specific industries, such as BFSI, and are therefore subject to risks relating to developments affecting these clients and industries that may cause them to reduce or postpone their IT spending.

For our fiscal year ended March 31, 2009, we derived substantially all of our revenue from clients located in the United States and the United Kingdom, as well as clients concentrated in certain industries. During the fiscal year ended March 31, 2009, we generated 72% of our revenue from clients in the United States

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and 26% of our revenue from clients in the United Kingdom. In addition, in our fiscal year ended March 31, 2009, we derived substantially all of our revenue from three industries: BFSI, communications and technology, and media and information. During our fiscal year ended March 31, 2009, we earned approximately 44% of our revenue from BFSI clients and our revenue from this industry vertical grew by approximately 22% from the prior fiscal year. Any significant decrease in the growth of the BFSI industries, significant consolidation in these industries or decrease in growth or consolidation in other industry verticals on which we focus, could materially reduce the demand for our services and negatively affect our revenue and profitability. In particular, the BFSI industries have recently experienced substantial losses relating to market conditions and economic downturn which have also resulted in the consolidation of several large companies in BFSI. If economic conditions continue to weaken or slow, particularly in the United States, the United Kingdom or any of the geographies or industries in which we focus, our clients may significantly reduce or postpone their IT spending. Reductions in IT budgets, increased consolidation or increased competition in these geographic locations or industries could result in an erosion of our client base and a reduction in our target market. Any reductions in the IT spending of companies in any one of these industries may reduce the demand for our services and negatively affect our revenue and profitability.

A significant or prolonged economic downturn in the IT services industry, or industries in which we focus, may result in our clients reducing or postponing spending on the services we offer.

Our revenue is dependent on our entering into large contracts for our services with a limited number of clients each year. As we are not the exclusive IT service provider for our clients, the volume of work that we perform for any specific client is likely to vary from year to year. There are a number of factors, other than our performance, that could affect the size, frequency and renewal rates of our client contracts. For instance, if economic conditions continue to weaken or deteriorate in the IT services industry or in any industry in which we focus, our clients may reduce or postpone their IT spending significantly which may, in turn, lower the demand for our services and negatively affect our revenue and profitability. As a way of dealing with a challenging economic environment, clients may change their outsourcing strategy by performing more work in-house or replacing their existing software with packaged software supported by the licensor. The loss of, or any significant decline in business from, one or more of our major clients likely would lead to a significant decline in our revenue and operating margins, particularly if we are unable to make corresponding reductions in our expenses in the event of any such loss or decline. Moreover, a significant change in the liquidity or financial position of any of these clients could have a material adverse effect on the collectability of our accounts receivable, liquidity and future operating results.

Our quarterly financial position, revenue, operating results and profitability are challenging to predict and may vary from quarter to quarter, which could cause our share price to decline significantly.

Our quarterly revenue, operating results and profitability have varied in the past and are likely to vary significantly from quarter to quarter in the future. The factors that are likely to cause these variations include:

•

unanticipated contract or project terminations; or reductions in scope or size of IT engagements

•

the continuing financial stability and growth prospects of our clients

•

general economic conditions

•

the number, timing, scope and contractual terms of IT projects in which we are engaged

•

delays in project commencement or staffing delays due to immigration issues or assignment of appropriately skilled or experienced personnel

•

the accuracy of estimates of resources, time and fees required to complete fixed-price projects and costs incurred in the performance of each project

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•

changes in pricing in response to client demand and competitive pressures

•

the mix of onsite and offshore staffing

•

the mix of leadership and senior technical resources to junior engineering resources staffed on each project

•

unexpected changes in the utilization rate of our IT professionals

•

seasonal trends, primarily our hiring cycle and the budget and work cycles of our clients

•

the ratio of fixed-price contracts to time-and-materials contracts in process

•

employee wage levels and increases in compensation costs, including timing of promotions and annual pay increases, particularly in India and Sri Lanka

•

our ability to have the client reimburse us for travel and living expenses, especially the airfare and related expenses of our Indian and Sri Lankan offshore personnel traveling and working onsite in the United States or the United Kingdom

•

one-time, non-recurring projects

As a result, our revenue and our operating results for a particular period are challenging to predict and may decline in comparison to corresponding prior periods regardless of the strength of our business. Our future revenue is also challenging to predict because we derive a substantial portion of our revenue from fees for services generated from short-term contracts that may be terminated or delayed by our clients without penalty. In addition, a high percentage of our operating expenses, particularly related to personnel and facilities, are relatively fixed in advance of any particular quarter and are based, in part, on our expectations as to future revenue. If we are unable to predict the timing or amounts of future revenue accurately, we may be unable to adjust spending in a timely manner to compensate for any unexpected revenue shortfall and fail to meet our forecasts. Unexpected revenue shortfalls may also decrease our gross margins and could cause significant changes in our operating results from quarter to quarter. As a result, and in addition to the factors listed above, any of the following factors could have a significant and adverse impact on our operating results, could result in a shortfall of revenue and could result in losses to us:

•

a client's decision not to pursue a new project or proceed to succeeding stages of a current project

•

the completion during a quarter of several major client projects could require us to pay underutilized team members in subsequent periods

•

adverse business decisions of our clients regarding the use of our services

•

our inability to transition team members quickly from completed projects to new engagements

•

our inability to manage costs, including personnel, infrastructure, facility and support services costs

•

exchange rate fluctuations

Due to the foregoing factors, it is possible that in some future periods our revenue and operating results may not meet the expectations of securities analysts or investors. If this occurs, the trading price of our common stock could fall substantially either suddenly or over time and our business, financial condition and results of operations would be adversely affected.

The international nature of our business exposes us to several risks, such as significant currency fluctuations and unexpected changes in the regulatory requirements of multiple jurisdictions.

We have operations primarily in India, Sri Lanka and the United Kingdom and we serve clients across North America, Europe, the Middle East and Asia. For the fiscal years ended March 31, 2009, 2008 and 2007, revenue generated outside of the United States accounted for 28%, 31% and 26% of total revenue, respectively. Our corporate structure also spans multiple jurisdictions, with Virtusa Corporation incorporated in Delaware and its operating subsidiaries organized in India, Sri Lanka, the United

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Kingdom and the Netherlands. As a result, our international revenue and operations are exposed to risks typically associated with conducting business internationally, many of which are beyond our control. These risks include:

•

significant currency fluctuations between the U.S. dollar and the currencies in which we conduct transactions, including most significantly, the U.K. pound sterling (in which our revenue is principally denominated) and the Indian and Sri Lankan rupees (in which a significant portion of our costs are denominated)

•

potentially adverse tax consequences, such as challenges to our transfer pricing arrangements, resulting in additional taxes owed by us or double taxation, challenges to our tax holidays by authorities in the countries in which we operate, potential tariffs and other trade barriers

•

difficulties in staffing, managing and supporting operations in multiple countries

•

potential fluctuation or decline in foreign economies

•

unexpected changes in regulatory requirements

•

legal uncertainty owing to the overlap of different legal regimes and problems in asserting contractual or other rights across international borders, including compliance with local laws of which we may be unaware

•

government currency control and restrictions on repatriation of earnings

•

the burden and expense of complying with the laws and regulations of various jurisdictions

•

domestic and international economic or political changes, hostilities, terrorist attacks and other acts of violence or war

•

earthquakes, tsunamis and other natural disasters in regions where we currently operate or may operate in the future

Negative developments in any of these areas in one or more countries could result in a reduction in revenue or demand for our services, the cancellation or delay of client contracts, business interruption, threats to our intellectual property, difficulty in collecting receivables and a higher cost of doing business, including higher taxes, any of which could negatively affect our business, financial condition or results of operations.

Currency exchange rate fluctuations may negatively affect our operating results.

The exchange rates among the Indian and Sri Lankan rupees and the U.S. dollar and the U.K. pound sterling, as well as the exchange rates between the U.S. dollar and the U.K. pound sterling, have changed substantially in recent periods and may continue to fluctuate substantially in the future. We expect that a majority of our revenue will continue to be generated in the U.S. dollar and U.K. pound sterling for the foreseeable future. During the fiscal year ended March 31, 2009, the U.S. dollar has strengthened materially against the U.K. pound sterling which has had, and may continue to have, a materially negative impact on our revenue generated in the U.K. pound sterling, as well as our operating income and net income. Any continued appreciation of the U.S. dollar against the U.K. pound sterling is likely to have a negative impact on our revenue, operating income and net income. For the foreseeable future, we also expect a significant portion of our expenses, including personnel costs, as well as capital and operating expenditures, will continue to be denominated in Indian and Sri Lankan rupees. Accordingly, any material appreciation of the Indian rupee or the Sri Lankan rupee against the U.S. dollar or U.K. pound sterling, could have a material adverse effect on our cost of services, gross margin and net income, which may in turn have a negative impact on our business, operating results and financial condition and results of operations. Although we have adopted an eight quarter cash flow hedging program to minimize the effect of the Indian rupee movement on our financial condition, these hedges may not be effective or may cause us to forego benefits, especially given the volatility of these currencies. In addition, to the extent that these

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hedges do not qualify for hedge accounting, we may have to recognize gains or losses on the aggregate amount of hedges placed earlier than expected. Furthermore, we are exposed to foreign currency volatility related to the Canadian dollar, the euro, and Sri Lankan rupee which are not currently hedged. Any significant change as compared to the U.S. dollar could have a negative impact on our revenue, operating profit, and net income. Finally, as we continue to leverage our global delivery model, more of our expenses will be incurred in currencies other than those in which we bill for the related services. An increase in the value of these currencies, such as the Indian rupee or Sri Lankan rupee, against the U.S. dollar could increase costs for delivery of services at off-shore sites by increasing labor and other costs that are denominated in local currency.

The IT services market is highly competitive and our competitors may have advantages that may allow them to compete more effectively than we do to secure client contracts and attract skilled IT professionals.

The IT services market in which we operate includes a large number of participants and is highly competitive. Our primary competitors include offshore IT outsourcing firms and consulting and systems integration firms.

We also occasionally compete with in-house IT departments, smaller vertically-focused IT service providers and local IT service providers based in the geographic areas where we compete. We expect additional competition from offshore IT outsourcing firms in emerging locations such as Eastern Europe, Latin America and China, as well as offshore IT service providers with facilities in less expensive geographies within India.

The IT services industry in which we compete is experiencing rapid changes in its competitive landscape. Some of the large consulting firms and offshore IT service providers with which we compete have significant resources and financial capabilities combined with a greater number of IT professionals. Many of our competitors are significantly larger and some have gained access to public and private capital or have merged or consolidated with better capitalized partners, which events have created and may in the future create, larger and better capitalized competitors. These competitors may have superior abilities to compete for market share and for our existing and prospective clients. Our competitors may be better able to use significant economic incentives, such as lower billing rates or non-billable resources, to secure contracts with our existing and prospective clients. These competitors may also be better able to compete for and retain skilled professionals by offering them more attractive compensation or other incentives. These factors may allow these competitors to have advantages over us to meet client demands in an engagement for large numbers and varied types of resources with specific experience or skill-sets that we may not have readily available in the short- or long-term. We cannot assure you that we can maintain or enhance our competitive position against current and future competitors. Our failure to compete effectively could have a material adverse effect on our business, financial condition or results of operations.

Adverse conditions in the global economy and disruption of financial markets could negatively impact our clients and therefore our results of operations.

As widely reported, financial markets in the United States, Europe and Asia have been experiencing extreme disruption in recent periods, including, among other things, extreme volatility in security prices, severely diminished liquidity and credit availability, rating downgrades of certain investments and declining valuations of others. While we do not currently require access to credit markets to finance our operations, these economic developments affect our clients in a number of ways. The current tightening of credit in financial markets adversely affects the ability of our clients to obtain financing for their operations and could result in decreased global IT spending which, in turn, could result in delays, reductions in, or cancellation of engagements for our services. Regional and global economic weakness and uncertainty have also resulted in some companies reassessing their spending for technology and IT related projects and services. We are unable to predict the likely duration and severity of the current disruption in financial markets and adverse economic conditions in the United States and other countries. Our revenue and

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profitability depend on the overall demand for IT services from our clients, including discretionary IT spending. As a result of the worldwide economic slowdown, it is extremely difficult for us to forecast future revenue growth based on historical information and trends. Portions of our expenses are fixed and other expenses are tied to expected levels of utilization. To the extent that we do not achieve anticipated level of revenue growth, our gross profit and net income could be adversely affected until such expenses are reduced to an appropriate level.

If we cannot attract and retain highly-skilled IT professionals, our ability to obtain, manage and staff new projects and expand existing projects may result in loss of revenue and an inability to expand our business.

Our ability to execute and expand existing projects and obtain new clients depends largely on our ability to hire, train and retain highly-skilled IT professionals, particularly project managers, IT engineers and other senior technical personnel. If we cannot hire and retain such additional qualified personnel, our ability to obtain, manage and staff new projects and to expand, manage and staff existing projects, may be impaired. We may then lose revenue and our ability to expand our business may be harmed. For example, in our fiscal year 2009, our voluntary attrition rate was 22.9%. There is intense worldwide competition for IT professionals with the skills necessary to perform the services we offer. We and the industry in which we operate generally experience high employee attrition and, we cannot assure you that we will be able to hire or retain the number and quality of technical personnel necessary to satisfy our current and future client needs. We also may not be able to hire and retain enough skilled and experienced IT professionals to replace those who leave. Additionally, if we have to replace personnel who have left our company, we will incur increased costs not only in hiring replacements but also in training such replacements until they can become productive and billable to our clients. In addition, we may not be able to redeploy and retrain our IT professionals in anticipation of continuing changes in technology, evolving standards and changing client preferences. Our inability to attract and retain IT professionals could have a material adverse effect on our business, operating results and financial condition.

We are investing substantial cash in new facilities and our profitability could be reduced if our business does not grow proportionately.

We have spent $13.7 million through March 31, 2009 and currently plan to spend approximately $9.0 million over the next two fiscal years ending March 31, 2011, in connection with the construction and build-out of a facility on our campus in Hyderabad, India. We also intend to make increased investments in our existing global delivery centers in Chennai, India and Colombo, Sri Lanka. We may face cost overruns and project delays in connection with these facilities or other facilities we may construct or seek to lease in the future. Such delays may also cause us to incur additional leasing costs to extend the terms of existing facility leases or to enter into new short-term leases if we cannot move into the new facilities in a timely manner. Such investment may also significantly increase our fixed costs, including an increase in depreciation expense. If we are unable to expand our business and revenue proportionately, our profitability will be reduced.

We may lose revenue if our clients terminate, reduce, or delay their contracts with us.

Our clients typically retain us on a non-exclusive, engagement-by-engagement basis, rather than under exclusive long-term contracts. Many of our contracts for services have terms of less than 12 months and permit our clients to terminate or reduce our engagements on prior written notice of 90 days or less for convenience, and without termination-related penalties. Further, many large client projects typically involve multiple independently defined stages, and clients may choose not to retain us for additional stages of a project or cancel or delay their start dates. These terminations, reductions, cancellations or delays could result from factors unrelated to our work product or the progress of the project, including:

•

client financial difficulties or general or industry specific economic downturns

•

a change in a client's strategic priorities, resulting in a reduced level of IT spending

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•

a client's demand for price reductions

•

a change in a client's outsourcing strategy that shifts work to in-house IT departments or to our competitors

•

consolidation by or among clients or an acquisition of a client

•

replacement by our client of existing software to packaged software supported by licensors

If our contracts were terminated early, materially delayed or reduced in size or scope, our business and operating results could be materially harmed and the value of our common stock could be impaired. Unexpected terminations, reductions, cancellation or delays in our client engagements could also result in increased operating expenses as we transition our team members to other engagements.

We may not be able to continue to maintain or increase the profitability, and growth rates of previous fiscal years

We may not succeed in maintaining our profitability and could incur losses in future periods. If we experience declines in demand or declines in pricing for our services, or if wages in India or Sri Lanka increase at a faster rate than in the United States and the United Kingdom, we will be faced with continued growing costs for our IT professionals, including wage increases. We also expect to continue to make investments in infrastructure, facilities, sales and marketing and other resources as we expand our operations, thus incurring additional costs. If our revenue does not increase to offset these increases in costs or operating expenses, our operating results would be negatively affected. In fact, in future quarters we may not have any revenue growth and our revenue and net income could decline. You should not consider our historic revenue and net income growth rates as indicative of future growth rates. Accordingly, we cannot assure you that we will be able to maintain or increase our profitability in the future.

Our inability to manage to a desired onsite-to-offshore service delivery mix may negatively affect our gross margins and costs and our ability to offer competitive pricing.

We may not succeed in maintaining or increasing our profitability and could incur losses in future periods if we are not able to manage to a desired onsite-to-offshore service delivery mix. To the extent that our engagements involve an increasing number of consulting, production support, software package implementation or other services typically requiring a higher percentage of onsite resources, we may not be able to manage to our desired service delivery mix. Additionally, other factors like client constraint or preferences or our inability to manage engagements effectively with limited resources onsite may result in a higher percentage of onsite resources than our desired service delivery mix. Accordingly, we cannot assure you that we will be able to manage to our desired onsite-to-offshore service delivery mix. If we are unable to manage to our targeted service delivery mix, our gross margins may decline and our profitability may be reduced. Additionally, our costs will increase and we may not be able to offer competitive pricing to our clients.

Our profitability is dependent on our billing and utilization rates, which may be negatively affected by various factors.

Our profit margin is largely a function of the rates we are able to charge for our services and the utilization rate of our IT professionals. The rates we are able to charge for our services are affected by a number of factors, including:

•

our clients' perception of our ability to add value through our services

•

the introduction of new services or products by us or our competitors

•

the size and/or duration of the engagement

•

the pricing policies of our competitors

•

general economic conditions

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A number of factors affect our utilization rate, including:

•

our ability to transition team members quickly from completed or terminated projects to new engagements

•

our ability to maintain continuity of existing resources on existing projects

•

our ability to obtain visas or applicable work permits for offshore personnel to commence projects at a client site for new or existing engagements

•

the amount of time spent by our team members on non-billable training activities

•

our ability to maintain resources who are appropriately skilled for specific projects

•

our ability to forecast demand for our services and thereby maintain an appropriate number of team members

•

our ability to manage team member attrition

•

seasonal trends, primarily our hiring cycle, holidays and vacations

•

the number of campus hires

If we are not able to maintain the rates we charge for our services or maintain an appropriate utilization rate for our IT professionals, our revenue will decline, our costs will increase and we will not be able to sustain our profit margin, any of which will have a material adverse effect on our profitability.

We may face damage to our professional reputation if our services do not meet our clients' expectations.

Many of our projects involve technology applications or systems that are critical to the operations of our clients' businesses and handle very large volumes of transactions. If we fail to perform our services correctly, we may be unable to deliver applications or systems to our clients with the promised functionality or within the promised time frame, or to satisfy the required service levels for support and maintenance. If a client is not satisfied with our services or products, including those of subcontractors we employ, our business may suffer. Moreover, if we fail to meet our contractual obligations, our clients may terminate their contracts and we could face legal liabilities and increased costs, including warranty claims against us. Any failure in a client's project could result in a claim for substantial damages, our inability to recognize all or some of the revenue for the client project, non-payment of outstanding invoices, loss of future business with such client and increased costs due to non-billable time of our resources dedicated to address any performance or client satisfaction issues, regardless of our responsibility for such failure.

Restrictions on immigration may affect our ability to compete for and provide services to clients in the United States, the United Kingdom, or other countries, which could result in lost revenue and delays in client engagements and otherwise adversely affect our ability to meet our growth and revenue projections.

The vast majority of our team members are Indian and Sri Lankan nationals. The ability of our IT professionals to work in the United States, the United Kingdom and other countries depends on our ability to obtain the necessary visas and entry permits. In recent years, the United States has increased the level of scrutiny in granting H-1B, L-1 and ordinary business visas. The H-1B visa classification enables U.S. employers to hire qualified foreign workers in positions that require an education at least equal to a four-year bachelor degree in the United States in specialty occupations such as IT systems engineering and systems analysis. The H-1B visa usually permits an individual to work and live in the United States for a period of up to six years. Under certain circumstances, H-1B visa extensions after the six-year period may be available. In addition, there are strict labor regulations associated with the H-1B visa classification. Larger users of the H-1B visa program are often subject to investigations by the Wage and Hour Division of the United States Department of Labor. A finding by the United States Department of Labor of willful or substantial failure by us to comply with existing regulations on the H-1B classification may result in back-pay liability, substantial fines, and/or a ban on future use of the H-1B program and other immigration

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benefits. We are users of the H-1B visa classification with respect to some of our key offshore workers who have relocated onsite to perform services for our clients.

We also regularly transfer employees from India and Sri Lanka to the United States to work on projects and at client sites using the L-1 visa classification. The L-1 visa allows companies abroad to transfer certain managers, executives and employees with specialized company knowledge to related United States companies such as a parent, subsidiary, affiliate, joint venture, or branch office. We have an approved "Blanket L Program," under which the corporate relationships of our transferring and receiving entities have been pre-approved by the United States Citizenship and Immigration Services, or CIS, thus enabling individual L-1 visa applications to be presented directly to a visa-issuing United States consular post abroad rather than undergoing the pre-approval process through CIS in the United States. In recent years, both the United States consular posts that review initial L-1 applications and CIS, which adjudicates petitions for initial grants and extensions of L-1 status, have become increasingly restrictive with respect to this category. As a result, the rate of refusals of initial L-1 petitions and of extensions has increased. In addition, even where L-1 visas are ultimately granted and issued, security measures undertaken by United States consular posts around the world have delayed visa issuances. Our inability to bring qualified technical personnel into the United States to staff on-site customer locations would have a material adverse effect on our business, results of operations and financial condition.

In response to terrorist attacks and global unrest, U.S. and U.K. immigration authorities, as well as other countries, have not only increased the level of scrutiny in granting visas, but have also introduced new security procedures, which include extensive background checks, personal interviews and the use of biometrics, as conditions to granting visas and work permits. A number of European countries are considering changes in immigration policies as well. The inability of key project personnel to obtain necessary visas or work permits could delay or prevent our fulfillment of client projects, which could hamper our growth and cause our revenue to decline. These restrictions and additional procedures may delay, or even prevent the issuance of a visa or work permit to our IT professionals and affect our ability to staff projects in a timely manner. Any delays in staffing a project can result in project postponement, delays or cancellation, which could result in lost revenue and decreased profitability and have a material adverse effect on our business, revenue, profitability and utilization rates.

Immigration laws in countries in which we seek to obtain visas or work permits may require us to meet certain other legal requirements as conditions to obtaining or maintaining entry visas. These immigration laws are subject to legislative change and varying standards of application and enforcement due to political forces, economic conditions or other events, including terrorist attacks. For instance, there are certain restrictions on transferring employees to work in the United Kingdom, where we have experienced growth. The United Kingdom requires that all employees who are not nationals of European Union countries (plus nationals of Bulgaria and Romania) to obtain work permission before obtaining a visa/entry clearance to travel to the United Kingdom. New European nationals from countries such as Hungary, Poland, Lithuania, Slovakia, and the Czech Republic do not have a work permit requirement but need to obtain a worker registration within 30 days of arrival. On November 27, 2008 the United Kingdom changed its immigration practices and introduced a points-based system under which certain certificates of sponsorship are issued by licensed employer sponsors, provided the employees they seek to employ in the United Kingdom, can demonstrate that the employee can accumulate 50 points based on attributes, which include academic qualifications, intended salary and other factors plus 10 points for English language (not necessary where the employee is an intra company transferee) and 10 points for maintenance. Where the employee has not worked for a Virtusa group company outside the United Kingdom for at least 6 months, we will need to carry out a resident labor market test to confirm that the intended role cannot be filled by an European Economic Area national. While we are an A-rated sponsor and have been able to obtain certificates of sponsorship to satisfy our demand for transfers to the United Kingdom, we can make no assurance that we can continue to do so.

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Further, we cannot predict the political or economic events that could affect immigration laws or any restrictive impact those events could have on obtaining or monitoring entry visas for our personnel. Our reliance on work visas and work permits for a significant number of our IT professionals makes us particularly vulnerable to such changes and variations, particularly in the United States and Europe, because these immigration and legislative changes affect our ability to staff projects with IT professionals who are not citizens of the country where the onsite work is to be performed. We may not be able to obtain a sufficient number of visas for our IT professionals or may encounter delays or additional costs in obtaining or maintaining such visas. To the extent we experience delays due to such immigration restrictions, we may encounter client dissatisfaction, project and staffing delays in new and existing engagements, project cancellations, higher project costs and loss of revenue, resulting in decreases in profits and a material adverse effect on our business, results of operations, financial condition and cash flows.

Proposed changes in U.S. immigration law, if approved into law, may substantially restrict or eliminate our ability to obtain visas to use offshore resources onsite, which could have a material adverse impact on our business, revenue, profitability and utilization rates.

Recently, due to the economic downturn in the U.S. economy and globally, and significant job losses in the United States and other factors, legislators in the United States have discussed comprehensive immigration reform which they are targeting for passage late in 2009. While the comprehensive immigration reform legislation focuses primarily on the millions of illegal immigrants in the United States, there is speculation that it may include some content regarding H-1(B) and L-1 visas as described in the recently proposed legislation. The potential risks and impact to our business if some or all of the proposed immigration legislation relating to use of H-1 (B) and L-1 visas is approved include:

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Reduced ability to bring in Level 1 foreign workers on L-1 or H-1(B) visas

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Increased scrutiny and requests for proof of eligibility on the use of L-1 and H-1(B) visas, including a requirement to pay prevailing wages for L-1 visa holders from the first day of transfer

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Elimination of a company's ability to pay the living expenses of an L-1 visa holder on a tax free basis

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Increased oversight by the Department of Labor (DOL) over issuance, use and administration of L-1 visas, just as the Department of Labor currently oversees H-1(B) visas

In addition new legislation may restrict companies with more than 50% of the U.S. based work force comprised of employees with an L-1 or H-1(B) visa from filing additional visa petitions, including visa petitions for H-1(B) or L-1 visas. Finally, the new legislation being discussed may require companies seeking H-1(B) and L-1 visas to undertake a good faith recruitment process to prove that there is no displacement of U.S. workers.

If some or all of the legislation discussed above were passed into law, we may not be able to apply for, or obtain necessary visas or work permits for key offshore personnel or other offshore resources needed for onsite assignments. Even if we are able to apply for, or obtain, such visas, we could incur substantial delays and costs in processing. Any inability to obtain, or extended delays in obtaining, these visas could materially delay or prevent our commencement or fulfillment of client projects, which could hamper our growth and cause our revenue to decline. In addition, we may have to hire or use local onsite resources rather using existing offshore resources to staff onsite engagements. Even if we use our offshore resources, we may have to put offshore resources on U.S. payroll at U.S prevailing wage levels and full benefits, rather than the existing practice of being able to provide a per diem reimbursement to the offshore resource on a tax free basis to cover living expenses while onsite. Our costs of revenue could then substantially increase and our gross profit and our gross margins then could be materially and adversely affected. Finally, if the legislation requires additional "good faith" recruiting processes to occur locally before applying for H-1(B) visas, our costs of hiring could increase, as well as our ability to staff appropriately skilled resources on client projects could be restricted or substantially delayed. Any such

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delays or inability to staff needed resources on client engagements may cause client dissatisfaction, project and staffing delays in new and existing engagements, project cancellations, higher project costs and loss of revenue, resulting in decreases in profits and a material adverse effect on our business, results of operations, financial condition and cash flows.

Potential future acquisitions, strategic investments, partnerships or alliances could be difficult to identify and integrate, divert the attention of key management personnel, disrupt our business, dilute stockholder value and adversely affect our financial results.

We may acquire or make strategic investments in complementary businesses, technologies or services or enter into strategic partnerships or alliances with third parties to enhance our business. If we do identify suitable candidates, we may not be able to complete transactions on terms commercially acceptable to us, if at all. These types of transactions involve numerous risks, including:

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difficulties in integrating operations, technologies, accounting and personnel

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difficulties in supporting and transitioning clients of our acquired companies or strategic partners

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diversion of financial and management resources from existing operations

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risks of entering new markets

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potential loss of key team members

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inability to generate sufficient revenue to offset transaction costs

We may finance future transactions through debt financing, the issuance of our equity securities, existing cash, cash equivalents or investments or a combination of the foregoing. Acquisitions financed with the issuance of our equity securities could be dilutive, which could affect the market price of our stock. Acquisitions financed with debt could require us to dedicate a substantial portion of our cash flow to principal and interest payments and could subject us to restrictive covenants. Acquisitions financed with our own cash could deplete the cash and working capital available to adequately fund our operations. Acquisitions also frequently result in the recording of goodwill and other intangible assets that are subject to potential impairments in the future that could harm our financial results. It is possible that we may not identify suitable acquisition, strategic investment or partnership or alliance candidates. Our inability to identify suitable acquisition targets, strategic investments, partners or alliances, or our inability to complete such transactions, may negatively affect our competitiveness and growth prospects. Moreover, if we fail to properly evaluate acquisitions, alliances or investments, we may not achieve the anticipated benefits of any such transaction and we may incur costs in excess of what we anticipate.

We may be required to spend substantial time and expense before we can recognize revenue, if any, from a client contract.

The period between our initial contact with a potential client and the execution of a client contract for our services is lengthy, and can extend over one or more fiscal quarters. To sell our services successfully and obtain an executed client contract, we generally have to educate our potential clients about the use and benefits of our services, which can require significant time, expense and capital without the ability to realize revenue, if any. If our sales cycle unexpectedly lengthens for one or more large projects, it would negatively affect the timing of our revenue, and hinder our revenue growth. Furthermore, a delay in our ability to obtain a signed agreement or other persuasive evidence of an arrangement or to complete certain contract requirements in a particular quarter, could reduce our revenue in that quarter. These delays or failures can cause our gross margin and profitability to fluctuate significantly from quarter to quarter. Overall, any significant failure to generate revenue or delays in recognizing revenue after incurring costs related to our sales or services process could have a material adverse effect on our business, financial condition and results of operations.

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We may not be able to recognize revenue in the period in which our services are performed, which may cause our margins to fluctuate.

Our services are performed under both time-and-material and fixed-price arrangements. All revenue is recognized pursuant to applicable accounting standards. These standards require us to recognize revenue once evidence of an arrangement has been obtained, services are delivered, fees are fixed or determinable and collectability is reasonably assured. If we perform our services prior to the time when we are able to recognize the associated revenue, our margins may fluctuate significantly from quarter to quarter.

Additionally, an increasing portion of our revenue is obtained from fixed price arrangements with our clients. Payment of our fees on fixed-price contracts is based on our ability to provide deliverables on certain dates or meet certain defined milestones. Our failure to produce the deliverables or meet the project milestones in accordance with agreed upon specifications or timelines, or otherwise meet a client's expectations, may result in our having to record the cost related to the performance of services in the period that services were rendered, but delay the timing of revenue recognition to a future period in which the milestone is met.

The loss of key members of our senior management team may prevent us from executing our business strategy.

Our future success depends to a significant extent on the continued service and performance of key members of our senior management team. Our growth and success depends to a significant extent on our ability to retain Kris Canekeratne, our chief executive officer, who is a founder of our company and has led the growth, operation, culture and strategic direction of our business since its inception. The loss of his services or the services of other key members of our senior management could seriously harm our ability to execute our business strategy. Although we have entered into agreements with certain of our executive officers providing for severance and change in control benefits to them, each of our executive officers or other key employees could terminate employment with us at any time. We also may have to incur significant costs in identifying, hiring, training and retaining replacements for key employees. The loss of any member of our senior management team might significantly delay or prevent the achievement of our business or development objectives and could materially harm our business. We do not maintain key man life insurance on any of our team members other than Kris Canekeratne.

Unexpected costs or delays could make our contracts unprofitable.

An increasing percentage of our client engagements represent fixed price engagements. When making proposals for engagements, especially our fixed price engagements, we estimate the costs and timing for completion of the projects. These estimates reflect our best judgment regarding the efficiencies of our methodologies, staffing of resources, complexities of the engagement and costs. The profitability of our engagements, and in particular our fixed-price contracts, are adversely affected by our ability to accurately estimate effort and resources needed to complete the project, increased or unexpected costs or unanticipated delays in connection with the performance of these engagements, including delays caused by factors outside our control, which could make these contracts less profitable or unprofitable. If we underestimate effort and resources required to complete a project and cannot recoup additional costs from our client, or if we endure additional costs or delays, and cannot complete the project, our utilization rates may lower as we remediate project issues, our profit from these engagements may be adversely affected and we may be subject to litigation claims.

Regulatory compliance may divert our attention from the day-to-day management of our business.

We have hired, and may need to hire a number of, additional team members with public accounting and disclosure experience in order to meet our ongoing obligations as a public company. Our management team and other personnel will need to devote a substantial amount of time to these new compliance initiatives. In particular, these new obligations will require substantial attention from our senior

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management and divert its attention away from the day-to-day management of our business, which could materially and adversely affect our business operations.

We are committed to maintaining high standards of corporate governance and public disclosure, and our efforts to comply with evolving laws, regulations and standards in this regard have resulted in, and are likely to continue to result in, increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities. In addition, the laws, regulations and standards regarding corporate governance may make it more difficult for us to obtain director and officer liability insurance. Further, our board members, chief executive officer and chief financial officer could face an increased risk of personal liability in connection with their performance of duties. As a result, we may face difficulties attracting and retaining qualified board members and executive officers, which could harm our business. If we fail to comply with new or changed laws, regulations or standards of corporate governance, our business and reputation may be harmed.

Our failure to anticipate rapid changes in technology may negatively affect demand for our services in the marketplace.

Our success will depend, in part, on our ability to develop and implement business and technology solutions that anticipate rapid and continuing changes in technology, industry standards and client preferences. We may not be successful in anticipating or responding to these developments on a timely basis, which may negatively affect demand for our solutions in the marketplace. Also, if our competitors respond faster than we do to changes in technology, industry standards and client preferences, we may lose business and our services may become less competitive or obsolete. Any one or a combination of these circumstances could have a material adverse effect on our ability to obtain and successfully complete client engagements.

Interruptions or delays in service from our third-party providers could impair our global delivery model, which could result in client dissatisfaction and a reduction of our revenue.

We depend upon third parties to provide a high speed network of active voice and data communications 24 hours per day and various satellite and optical links between our global delivery centers and our clients. Consequently, the occurrence of a natural disaster or other unanticipated problems with the equipment or at the facilities of these third-party providers could result in unanticipated interruptions in the delivery of our services. For example, we may not be able to maintain active voice and data communications between our global delivery centers and our clients' sites at all times due to disruptions in these networks, system failures or virus attacks. Any significant loss in our ability to communicate or any impediments to any IT professional's ability to provide services to our clients could result in a disruption to our business, which could hinder our performance or our ability to complete client projects in a timely manner. This, in turn, could lead to substantial liability to our clients, client dissatisfaction, loss of revenue and a material adverse effect on our business, our operating results and financial condition. We cannot assure you that our business interruption insurance will adequately compensate our clients or us for losses that may occur. Even if covered by insurance, any failure or breach of security of our systems could damage our reputation and cause us to lose clients.

Our ability to raise capital in the future may be limited and our failure to raise capital when needed could prevent us from growing.

We anticipate that our current cash and cash equivalents and short-term investments, together with cash generated from operations, will be sufficient to meet our current needs for general corporate purposes for the foreseeable future. We may also need additional financing to execute our current or future business strategies, including to:

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add additional global delivery centers

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•

procure additional capacity and facilities

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hire additional personnel

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enhance our operating infrastructure

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acquire businesses or technologies

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otherwise respond to competitive pressures

If we raise additional funds through the issuance of equity or convertible debt securities, the percentage ownership of our stockholders could be significantly diluted and these newly issued securities may have rights, preferences or privileges senior to those of existing stockholders. If we incur additional debt financing, a substantial portion of our operating cash flow may be dedicated to the payment of principal and interest on such indebtedness, thus limiting funds available for our business activities. Any such debt financing could require us to comply with restrictive financial and operating covenants, which could have a material adverse impact on our business, results of operations or financial condition. We cannot assure you that additional financing will be available on terms favorable to us, or at all. If adequate funds are not available or are not available on acceptable terms, when we desire them, our ability to fund our operations and growth, take advantage of unanticipated opportunities or otherwise respond to competitive pressures may be significantly limited.

Some of our client contracts contain restrictions or penalty provisions that, if triggered, could result in lower future revenue and decrease our profitability.

We have entered in the past, and may in the future enter, into contracts that contain restrictions or penalty provisions that, if triggered, may adversely affect our operating results. For instance, some of our client contracts provide that, during the term of the contract and for a certain period thereafter ranging from six to 12 months, we may not use the same personnel to provide similar services to any of the client's competitors. This restriction may hamper our ability to compete for and provide services to clients in the same industry. In addition, some contracts contain provisions that would require us to pay penalties to our clients if we do not meet pre-agreed service level requirements. If any of the foregoing were to occur, our future revenue and profitability under these contracts could be materially harmed.

Negative public perception in the United States and the United Kingdom regarding offshore IT service providers and proposed legislation may adversely affect demand for our services.

We have based our growth strategy on certain assumptions regarding our industry, services and future demand in the market for such services. However, the trend to outsource IT services may not continue and could reverse. Offshore outsourcing is a politically sensitive topic in the United States and the United Kingdom. For example, recently many organizations and public figures in the United States and the United Kingdom have publicly expressed concern about a perceived association between offshore outsourcing providers and the loss of jobs in their home countries. In addition, there has been recent publicity about the negative experience of certain companies that use offshore outsourcing, particularly in India. Current or prospective clients may elect to perform such services themselves or may be discouraged from transferring these services from onshore to offshore providers to avoid negative perceptions that may be associated with using an offshore provider. Any slowdown or reversal of existing industry trends towards offshore outsourcing would seriously harm our ability to compete effectively with competitors that operate out of facilities located in the United States or the United Kingdom.

Legislation in the United States or the United Kingdom may be enacted that is intended to discourage or restrict outsourcing. In the United States, a variety of federal and state legislation has been proposed that, if enacted, could restrict or discourage U.S. companies from outsourcing their services to companies outside the United States. For example, legislation has been proposed that would require offshore providers to identify where they are located. In addition, it is possible that legislation could be adopted that would restrict U.S. private sector companies that have federal or state government contracts from

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outsourcing their services to offshore service providers. We do not currently have any contracts with U.S. federal or state government entities. However, there can be no assurance that these restrictions will not extend to or be adopted by private companies, including our clients, or that we will not enter into government related contracts in the future. Recent legislation introduced in the United Kingdom would restrict or discourage companies from outsourcing their services, including IT services. Any changes to existing laws or the enactment of new legislation restricting offshore outsourcing in the United States or the United Kingdom may adversely affect our ability to do business in the United States or in the United Kingdom, particularly if these changes are widespread, and could have a material adverse effect on our business, results of operations, financial condition and cash flows.

Our services may infringe on the intellectual property rights of others, which may subject us to legal liability, harm our reputation, prevent us from offering some services to our clients or distract management.

We cannot be sure that our services or the deliverables that we develop and create for our clients do not infringe on the intellectual property rights of third parties and infringement claims may be asserted against us or our clients. These claims may harm our reputation, distract management, increase costs and prevent us from offering some services to our clients. Historically, we have generally agreed to indemnify our clients for all expenses and liabilities resulting from infringement of intellectual property rights of third parties based on the services and deliverables that we have performed and provided to our clients. In some instances, the amount of these indemnities may be greater than the revenue we receive from the client. In addition, as a result of intellectual property litigation, we may be required to stop selling, incorporating or using products that use or incorporate the infringed intellectual property. We may be required to obtain a license or pay a royalty to make, sell or use the relevant technology from the owner of the infringed intellectual property. Such licenses or royalties may not be available on commercially reasonable terms, or at all. We may also be required to redesign our services or change our methodologies so as not to use the infringed intellectual property, which may not be technically or commercially feasible and may cause us to expend significant resources. Subject to certain limitations, under our indemnification obligations to our clients, we may also have to provide refunds to our clients to the extent that we must require them to cease using an infringing deliverable if we are unable to provide a work around or acquire a license to permit use of the infringing deliverable that we had provided to them as part of a service engagement. If we are obligated to make any such refunds or dedicate time to provide alternatives or acquire a license to the infringing intellectual property, our business and financial condition could be materially adversely affected.

Any claims or litigation involving intellectual property, whether we ultimately win or lose, could be extremely time-consuming, costly and injure our reputation.

As the number of patents, copyrights and other intellectual property rights in our industry increases, we believe that companies in our industry will face more frequent infringement claims. Defending against these claims, even if the claims have no merit, may not be covered by or could exceed the protection offered by our insurance and could divert management's attention and resources from operating our company.

We may face liability if we inappropriately disclose confidential client information.

In the course of providing services to our clients, we may have access to confidential client information. We are bound by certain agreements to use and disclose this information in a manner consistent with the privacy standards under regulations applicable to our clients. Although these privacy standards may not apply directly to us, if any person, including a team member of ours, misappropriates client confidential information, or if client confidential information is inappropriately disclosed due to a breach of our computer systems, system failures or otherwise, we may have substantial liabilities to our clients or our clients' customers. In addition, in the event of any breach or alleged breach of our confidentiality agreements with our clients, these clients may terminate their engagements with us or sue us for breach of contract, resulting in the associated loss of revenue and increased costs. We may also be subject to civil or

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criminal liability if we are deemed to have violated applicable regulations. We cannot assure you that we will adequately address the risks created by the regulations to which we may be contractually obligated to abide.

We may not be able to obtain, develop or implement new systems, infrastructure, procedures and controls that are required to support our operations, maintain cost controls, market our services and manage our relationships with our clients.

To manage our operations effectively, we must continue to maintain and may need to enhance, our IT infrastructure, financial and accounting systems and controls and manage expanded operations in several locations. We also must attract, integrate, train and retain qualified personnel, especially in the areas of accounting, internal audit and financial disclosure. Further, we will need to manage our relationships with various clients, vendors and other third parties. We may not be able to develop and implement, on a timely basis, if at all, the systems, infrastructure procedures and controls required to support our operations. Additionally some factors, like changes in immigration laws or visa processing restrictions that limit our ability to engage offshore resources at client locations in the United States, the United Kingdom or other countries, are outside of our control, including our financial, operational and communication systems, processes and controls. Our future operating results will also depend on our ability to develop and maintain a successful sales organization. If we are unable to manage our operations effectively, our operating results could fluctuate from quarter to quarter and our financial condition could be materially adversely affected.

Due to our current inability to sell certain of our Auction-Rate Securities ("ARS"), the securities may experience additional declines in value, and funds associated with the securities may be inaccessible in excess of 12 months, which could adversely affect the value and liquidity of our assets.

Our marketable securities portfolio at March 31, 2009 included ARS investments with a par value of $7.7 million from various issuers collateralized by student loans and municipal debt. ARS investments are principally investments with long-term contractual maturities but with interest rates that are reset every seven to thirty-five days by auctions. At the end of each reset period, investors can sell or continue to hold the securities at par. During February, 2008, certain ARS investments that we held experienced failed auctions that limited the liquidity of these investments. Due to our inability to sell these securities at auction since February, 2008, on November 10, 2008, we accepted an offer from UBS AG ("UBS"), one of our investment brokers through whom we purchased $6.7 million of our ARS, that grants us the right to sell our ARS back to UBS, at par value, at any time during a two-year period beginning June 30, 2010 (the "Put Option"). We may be unable to liquidate our ARS securities, and there is no guarantee UBS will be able to redeem the Put Option on or after June 30, 2010.

Our results of operations and business may be adversely affected investigations conducted by the Wage and Hour Division of the U.S. Department of Labor.

There are strict labor regulations associated with the H-1B visa classification. Larger employers of the H-1B visa program are often subject to investigations by the Wage and Hour Division of the U.S. Department of Labor. In October 2008, the Department of Labor commenced an investigation to determine if we have complied with the elements of the Labor Condition Application(s) (ETA Form 9035) to hire certain H-1B non-immigrant workers. We believe the Department of Labors' primary focus was on whether our team members with H-1B renewals were paid at the appropriate pay level. We cannot provide any assurance that the Department of Labor will not initiate other investigations regarding our employment and immigration practices in the future. An adverse finding by the U.S. Department of Labor may result in back-pay liability, substantial fines, and/or a ban on future use of the H-1B program and other immigration benefits, which could materially harm our business and results of operations.

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Risks related to our Indian and Sri Lankan operations

Political instability or changes in the government in India could result in the change of several policies relating to foreign direct investment and repatriation of capital and dividends. Further, changes in the economic policies could adversely affect economic conditions in India generally and our business in particular.

We have three subsidiaries in India and a significant portion of our business, fixed assets and human resources are located in India. As a result, our business is affected by foreign exchange rates and controls, interest rates, local regulations, changes in government policy, taxation, social and civil unrest and other political, economic or other developments in or affecting India.

Since 1991, successive Indian governments have pursued policies of economic liberalization, including significantly relaxing restrictions on foreign direct investment into India with repatriation benefits. Nevertheless, the roles of the Indian central and state governments in the Indian economy as producers, consumers and regulators have remained significant. The rate of economic liberalization could change and specific laws and policies affecting software companies, foreign investment, currency exchange and other matters affecting investment in our securities could change as well. A significant change in India's economic liberalization and deregulation policies could adversely affect business and economic conditions in India generally and our business in particular, if new restrictions on the private sector are introduced or if existing restrictions are increased.

Changes in the policies of the government of Sri Lanka or political instability could delay the further liberalization of the Sri Lankan economy and adversely affect economic conditions in Sri Lanka, which could adversely affect our business.

Our subsidiary in Sri Lanka has been approved as an export computer software developer by the Board of Investment in Sri Lanka, which is a statutory body organized to facilitate foreign investment into Sri Lanka and grant concessions and benefits to entities with which it has entered into agreements. Pursuant to our agreement with the Board of Investment, our subsidiary is entitled to exemptions from taxation on income for a period of 12 years expiring on March 31, 2019. Nevertheless, government policies relating to taxation other than on income would have an impact on the subsidiary, and the political, economic or social factors in Sri Lanka may affect these policies. Historically, past incumbent governments have followed policies of economic liberalization. However, we cannot assure you that the current government or future governments will continue these liberal policies.

Regional conflicts or terrorist attacks and other acts of violence or war in India, Sri Lanka, the United States, the United Kingdom or other regions could adversely affect financial markets, resulting in loss of client confidence and our ability to serve our clients which, in turn, could adversely affect our business, results of operations and financial condition.

The Asian region has from time to time experienced instances of civil unrest and hostilities among neighboring countries, including between India and Pakistan. Since May 1999, military confrontations between India and Pakistan have occurred in Kashmir. Also, there have been military hostilities and civil unrest in Iraq. Terrorist attacks, such as the ones that occurred in New York and Washington, D.C., on September 11, 2001, New Delhi on December 13, 2001, Bali on October 12, 2002, London on July 7, 2005, Mumbai on November 26, 2008, civil or political unrest and military hostilities in Sri Lanka and other acts of violence or war, including those involving India, Sri Lanka, the United States, the United Kingdom or other countries, may adversely affect U.S., U.K. and worldwide financial markets. Prospective clients may wish to visit several of our facilities, including our global delivery centers in India and Sri Lanka, prior to reaching a decision on vendor selection. Terrorist threats, attacks and international conflicts could make travel more difficult and cause potential clients to delay, postpone or cancel decisions to use our services. In addition, such attacks may have an adverse impact on our ability to operate effectively and interrupt lines of communication and restrict our offshore resources from traveling onsite to client locations, effectively curtailing our ability to deliver our services to our clients. These obstacles may increase our

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expenses and negatively affect our operating results. In addition, military activity, terrorist attacks, political tensions between India and Pakistan and conflicts within Sri Lanka could create a greater perception that the acquisition of services from companies with significant Indian or Sri Lankan operations involves a higher degree of risk that could adversely affect client confidence in India or Sri Lanka as a software development center, each of which would have a material adverse effect on our business.

Recently, the Sri Lankan government has made substantial military gains in the ethnic conflict against the Tamil Tigers in Sri Lanka. The many years of the ethnic conflict have substantially affected the political and economic climate of Sri Lanka. With the military conflict now ending, the Sri Lankan economy may benefit from increased tourism, foreign investment and overall political stability. With economic growth and stability, the Sri Lankan currency may appreciate and there may be increased diversification in job opportunities for the Sri Lankan workforce. If the Sri Lankan rupee appreciates, our costs of operations may increase. In addition, if the Sri Lankan labor pool gains a growing number of alternatives due to an expanding and diversifying local economy, we may encounter increased competition and costs in recruiting, hiring and retaining qualified resources, each of which could have a negative impact on our costs of revenue and margins.

Our net income may decrease if the governments of the United Kingdom, the United States, India or Sri Lanka adjust the amount of our taxable income by challenging our transfer pricing policies.

Our subsidiaries conduct intercompany transactions among themselves and with the U.S. parent company on an arm's-length basis in accordance with U.S. and local country transfer pricing regulations. The jurisdictions in which we pay income taxes could challenge our determination of arm's-length profit and issue tax assessments. Although the United States has income tax treaties with all countries in which we have operations, the costs to appeal any such tax assessment and potential interest and penalties could decrease our earnings and cash flows.

The Indian taxing authorities issued an assessment order with respect to their examination of our tax returns for the fiscal years ended March 31, 2004 and March 31, 2005 of our Indian subsidiary, Virtusa (India) Private Ltd., or Virtusa India. At issue in each assessment were several matters, the most significant of which was the re-determination of the arm's-length profit related to intercompany transactions. We are contesting both assessments and have filed, or intend to file, appeals with both the appropriate Indian tax authorities and the U.S. Competent Authority.

Our net income may decrease if the governments of India or Sri Lanka reduce or withdraw tax benefits and other incentives provided to us or levy new taxes.

Virtusa India is an export-oriented company under the Indian Income Tax Act of 1961 and is entitled to claim tax exemption for each Software Technology Park, or STP, which it operates. Virtusa India currently operates two STPs, in Chennai and in Hyderabad. Substantially all of the earnings of both STPs qualify as tax-exempt export profits. These holidays will be completely phased out by March 2010, and at that time any profits would be fully taxable at the Indian statutory rate, which is currently 34%. Although we believe we have complied with and are eligible for the STP holiday, the government of India may deem us ineligible for the STP holiday or make adjustments to the profit level resulting in an overall increase in our effective tax rate. We have located a portion of our Indian operations in areas designated as a Special Economic Zone, or SEZ, under the SEZ Act of 2005. In particular, we are continuing our construction of a facility on a campus on a 6.3 acre parcel of land in Hyderabad, India that has been designated as a SEZ. In addition, we have leased space and operate on a SEZ designated location in Chennai, India. Although our profits from the SEZ operations would be eligible for certain income tax exemptions for a period up to 15 years, we may not be able to take full advantage of the tax holidays in each SEZ if we are not able to migrate our operations, including the hiring of IT professionals, into the SEZ facilities and there is no guarantee that we will secure SEZ status for any other future locations in India. Additionally, the

31

government of India may deem us ineligible for a SEZ holiday or make adjustments to the transfer pricing profit levels resulting in an overall increase in our effective tax rate.

In addition, our Sri Lankan subsidiary, Virtusa Private Ltd., or Virtusa SL, was approved as an export computer software developer by the Sri Lanka Board of Investment in 1998 and has negotiated multiple extensions of the original holiday period in exchange for further capital investments in Sri Lanka facilities. The most recent 12-year agreement, which is set to expire on March 31, 2019, requires that we meet certain new job creation and investment criteria. Our inability to meet the agreed upon timetable for new job creation and investment would jeopardize the benefits of the holiday arrangement.

Fringe Benefit Tax legislation in India could harm our results of operations and ability to attract, hire and retain qualified personnel.

In May 2007, the Parliament of India enacted the Finance Act, 2007, which, among other things, imposes a fringe benefit tax at the applicable Indian tax rate (currently 34%) on certain stock compensation and equity awards paid or issued to team members of our Indian subsidiaries. Specifically, the fringe benefit tax, which is payable upon the exercise of such equity awards, is based on the fair market value of the equity award upon vesting. Because our potential tax liability is dependent on the fair market value of our common stock at the time of vesting of such equity awards, which could span over the next several years, and whether the equity awards are ultimately exercised, it is difficult to accurately forecast and could represent a significant liability and expense to us. We have decided to reduce the impact of this tax obligation on us, by passing the cost of the fringe benefit tax on to our team members from our Indian subsidiaries. However, such alternatives do not eliminate the negative impact of the tax liability on our statements of income and result in significant non-cash compensation expense, which impacts our gross margin, operating profit margin and net income and creates volatility in our income from operations from period to period. This transfer of cost could significantly decrease the desirability of these equity awards to these team members, which could harm our ability to attract, hire and retain qualified personnel. In addition, there is no guarantee that we will be able to collect all the costs back from our employees.

Wage pressures and increases in government mandated benefits in India and Sri Lanka may reduce our profit margins.

Wage costs in India and Sri Lanka have historically been significantly lower than wage costs in the United States and Europe for comparably-skilled professionals. However, wages in India and Sri Lanka are increasing, which will result in increased costs for IT professionals, particularly project managers and other mid-level professionals. We may need to increase the levels of our team member compensation more rapidly than in the past to remain competitive without the ability to make corresponding increases to our billing rates. Compensation increases may reduce our profit margins, make us less competitive in pricing potential projects against those companies with lower cost resources and otherwise harm our business, operating results and financial condition.

In addition, we contribute to benefit funds covering our employees in India and Sri Lanka as mandated by the Indian and Sri Lankan governments. Benefits are based on the team member years of service and compensation. If the governments of India and/or Sri Lanka were to legislate increases to the benefits required under these plans or mandate additional benefits, our profitability and cash flows would be reduced.

Our facilities are at risk of damage by earthquakes, tsunamis and other natural disasters.

In December 2004, Sri Lanka and India were struck by multiple tsunamis that devastated certain areas of both countries. Our Indian and Sri Lankan facilities are located in regions that are susceptible to tsunamis and other natural disasters, which may increase the risk of disruption of information systems and telephone service for sustained periods. Damage or destruction that interrupts our ability to deliver our services could damage our relationships with our clients and may cause us to incur substantial additional expense to

32

repair or replace damaged equipment or facilities. Our insurance coverage may not be sufficient to cover all such expenses. Furthermore, we may be unable to secure such insurance coverage or to secure such insurance coverage at premiums acceptable to us in the future. Prolonged disruption of our services as a result of natural disasters may cause our clients to terminate their contracts with us and may result in project delays, project cancellations and loss of substantial revenue to us. Prolonged disruptions may also harm our team members or cause them to relocate, which could have a material adverse effect on our business.

The laws of India and Sri Lanka do not protect intellectual property rights to the same extent as those of the United States and we may be unsuccessful in protecting our intellectual property rights. Unauthorized use of our intellectual property rights may result in loss of clients and increased competition.

Our success depends, in part, upon our ability to protect our proprietary methodologies, trade secrets and other intellectual property. We rely upon a combination of trade secrets, confidentiality policies, non-disclosure agreements, other contractual arrangements and copyright and trademark laws to protect our intellectual property rights. However, existing laws of India and Sri Lanka do not provide protection of intellectual property rights to the same extent as provided in the United States. The steps we take to protect our intellectual property may not be adequate to prevent or deter infringement or other unauthorized use of our intellectual property. Thus, we may not be able to detect unauthorized use or take appropriate and timely steps to enforce our intellectual property rights. Our competitors may be able to imitate or duplicate our services or methodologies. The unauthorized use or duplication of our intellectual property could disrupt our ongoing business, distract our management and team members, reduce our revenue and increase our costs and expenses. We may need to litigate to enforce our intellectual property rights or to determine the validity and scope of the proprietary rights of others. Any such litigation could be extremely time-consuming and costly and could materially adversely impact our business.

Any changes in U.S. corporate income tax law to impose U.S. tax on untaxed foreign profits could result in a higher effective income tax rate for us and adversely impact net income.

Recently, tax law changes have been proposed in the United States to limit certain incentives for U.S. companies which invest and reinvest overseas. While the legislation being discussed does not currently seek to repeal the current tax exemption on permanently reinvested foreign profits, we can make no assurance that a more far reaching tax proposal impacting permanently reinvested foreign profits would not ultimately be enacted. If the current exemption for permanently reinvested foreign profits were to be repealed, it would have a negative impact on our effective tax rate and net income as we permanently reinvest certain of our profits in and through certain of our non-U.S. subsidiaries located in India and Sri Lanka where certain of such profits are not currently subject to tax under tax holidays in these countries.

Risks related to our common stock

Our common stock may become more volatile, especially given the recent global economic downturn and volatility in domestic and international stock markets.

Since mid-2007, global credit and other financial markets have suffered substantial stress, volatility, illiquidity and disruption. These forces reached unprecedented levels in September and October 2008, resulting in the bankruptcy or acquisition of, or government assistance to, several major domestic and international financial institutions and a material decline in economic conditions regionally and globally causing extreme volatility in domestic and international stock markets. In particular, the NASDAQ Global Market, on which our common stock is traded, has experienced significant price and volume fluctuations that have negatively affected the market prices of equity securities of many technology companies. Since our initial public offering in August 2007, our stock has experienced volatility. For instance, the closing sale price of our common stock on the NASDAQ Global Market has ranged from $19.60 on November 13, 2007 to $4.21 on October 27, 2008. These fluctuations have often been unrelated or disproportionate to

33

operating performance. In addition, there are many other factors that may cause the market price of our common stock to fluctuate, including:

•

actual or anticipated variations in our quarterly operating results or the quarterly financial results of companies perceived to be similar to us

•

deterioration and decline in general economic, industry and/or market conditions

•

announcements of technological innovations or new services by us or our competitors

•

changes in estimates of our financial results or recommendations by market analysts

•

announcements by us or our competitors of significant projects, contracts, acquisitions, strategic alliances or joint ventures

•

changes in our capital structure, such as future issuances of securities or the incurrence of additional debt

•

regulatory developments in the United States, the United Kingdom, Sri Lanka, India or other countries in which we operate or have clients

•

litigation involving our company, our general industry or both

•

additions or departures of key team members

•

investors' general perception of us

•

changes in the market valuations of other IT service providers

If any of the foregoing occurs or continues to occur, it could cause our stock price to fall and may expose us to securities class action litigation. Any securities class action litigation could result in substantial costs and the diversion of management's attention and resources. Many of these factors are beyond our control.

Provisions in our charter documents and under Delaware law may prevent or delay a change of control of us and could also limit the market price of our common stock.

Certain provisions of Delaware law and of our certificate of incorporation and by-laws could have the effect of making it more difficult for a third party to acquire, or of discouraging a third party from attempting to acquire, control of us, even if such a change in control would be beneficial to our stockholders or result in a premium for your shares of our common stock. These provisions may also prevent or frustrate attempts by our stockholders to replace or remove our management. These provisions include:

•

a classified board of directors

•

limitations on the removal of directors

•

advance notice requirements for stockholder proposals and nominations

•

the inability of stockholders to act by written consent or to call special meetings

•

the ability of our board of directors to make, alter or repeal our by-laws

The affirmative vote of the holders of at least 75% of our shares of capital stock entitled to vote is necessary to amend or repeal the above provisions that are contained in our certificate of incorporation. In addition, our board of directors has the ability to designate the terms of and issue new series of preferred stock without stockholder approval. Also, absent approval of our board of directors, our by-laws may only be amended or repealed by the affirmative vote of the holders of at least 75% of our shares of capital stock entitled to vote.

In addition, we are subject to the provisions of Section 203 of the Delaware General Corporation Law, which limits business combination transactions with stockholders of 15% or more of our outstanding voting

34

stock that our board of directors has not approved. These provisions and other similar provisions make it more difficult for stockholders or potential acquirers to acquire us without negotiation. These provisions may apply even if some stockholders may consider the transaction beneficial to them.

These provisions could limit the price that investors are willing to pay in the future for shares of our common stock. These provisions might also discourage a potential acquisition proposal or tender offer, even if the acquisition proposal or tender offer is at a premium over the then current market price for our common stock.

Our existing stockholders and management control a substantial interest in us and thus may influence certain actions requiring stockholder vote.

Our executive officers, directors and stockholders affiliated with our directors will beneficially own, in the aggregate, shares representing approximately 43.2% of our outstanding capital stock. Although we are not aware of any voting arrangements that are in place among these stockholders, if these stockholders were to choose to act together, as a result of their stock ownership, they would be able to control all matters submitted to our stockholders for approval, including the election of directors and approval of any merger, consolidation or sale of all or substantially all of our assets. This concentration of voting power could delay or prevent an acquisition of our company on terms that other stockholders may desire.

Item 1B.    Unresolved Staff Comments.

None.

Item 2.    Properties.

Our principal executive offices are located in Westborough, Massachusetts, where we lease approximately 30,000 square feet. We also have sales and business development offices located in Windsor and London in the United Kingdom.

We have global delivery centers located in Hyderabad and Chennai, India and Colombo, Sri Lanka. We lease space at four facilities in Hyderabad, India, totaling approximately 151,605 square feet, and at two facilities in Chennai, India, totaling approximately 117,500 square feet. In Colombo, Sri Lanka, we lease space at two facilities totaling approximately 140,100 square feet, and have vacated 21,300 square feet which we are obligated to pay for until July 2009. Our leases vary in duration and term, have varying renewable terms and have expiration dates extending from 2008 to 2012. In addition, in March 2007, we entered into a 99-year lease, as amended in August 2007, with an option for an additional 99 years for approximately 6.3 acres of land in Hyderabad, India, where we are presently building a campus. We are in the process of constructing a facility on such campus which, when completed, will total approximately 340,000 square feet.

We believe that our existing and planned facilities are adequate to support our existing operations and that, as needed, we will be able to obtain suitable additional facilities on commercially reasonable terms.

Item 3.    Legal Proceedings.

We are involved in various claims and legal actions arising in the ordinary course of business. In the opinion of our management, the outcome of such claims and legal actions, if decided adversely, is not currently expected to have a material adverse effect on our operating results, cash flows or consolidated financial position.

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

None.

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PART II

Item 5.    Market for Our Common Equity, Related Stockholder Matters and Purchases of Equity Securities.

Our common stock commenced trading on the NASDAQ Global Market on August 3, 2007 under the symbol "VRTU". The following table sets forth, for the periods indicated, the high and low sale prices for our common stock for our fiscal years ended March 31, 2009 and March 31, 2008, respectively, as reported on the NASDAQ Global Market.

Fiscal 2008:	High		Low
Second quarter*	$	15.99	$	11.04
Third quarter	$	19.97	$	12.57
Fourth quarter	$	17.07	$	8.55
Fiscal 2009:
First quarter	$	12.10	$	8.74
Second quarter	$	10.42	$	5.00
Third quarter	$	6.63	$	4.00
Fourth quarter	$	7.75	$	5.00

*

Our common stock began trading on August 3, 2007.

As of May 26, 2009, there were approximately 24,746,321 shares of our common stock outstanding held by approximately 44 stockholders of record and the last reported sale price of our common stock on the NASDAQ Global Market on May 26, 2009 was $7.10 per share.

Dividend Policy

We have never declared or paid any cash dividends on our capital stock. We currently expect to retain future earnings, if any, to finance the growth and development of our business and we do not anticipate paying any cash dividends in the foreseeable future. We intend to permanently reinvest our foreign earnings. Our line of credit with a bank could restrict our ability to declare or make any dividends or similar distributions.

Equity Compensation Plan Information

The following table provides information as of March 31, 2009 with respect to the shares of our common stock that may be issued under our existing equity compensation plans. We have three equity compensation plans, each of which has been approved by our stockholders: (1) the Amended and Restated 2000 Stock Option Plan, which we refer to as the 2000 Plan; (2) the 2005 Stock Appreciation Rights Plan, which we refer to as the SAR Plan; and (3) the 2007 Stock Option and Incentive Plan, which we refer to as the 2007 Plan. For additional information on our equity compensation plans, including the material

36

features of plans not approved by our stockholders, please see note 10 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Plan Category	Number of Securities to be Issued Upon Vesting of Awards or Exercise of Outstanding Options		Weighted Average Exercise Price of Awards or Outstanding Options		Number of Securities Available for Future Issuance Under Equity Compensation Plans
Equity compensation plans that have been approved by security holders—stock options(1)		2,349,481	$	4.94		305,337	(2)(3)
Equity compensation plans that have been approved by security holders—stock appreciation rights(4)		112,886	$	4.11		—	(2)
Equity compensation plans not approved by security holders(5)		458,959	$	3.07		—
Total		2,921,326				305,337

(1)

Consists of the 2000 Plan and the 2007 Plan.

(2)

In the event that any stock option issued under the 2000 Plan or any stock appreciation right issued under the SAR Plan terminates without being exercised, the number of shares underlying such option or stock appreciation right becomes available for grant under the 2007 Plan. No further awards are authorized to be granted under the 2000 Plan or the SAR Plan.

(3)

Under the 2007 Plan, the number of shares reserved and available for issuance under the 2007 Plan is automatically increased each April 1 by 2.9% of the outstanding number of shares of common stock outstanding on the immediately preceding March 31 or such lower number of shares of common stock as determined by our board of directors.

(4)

Consists of the SAR Plan.

(5)

Consists of 458,959 shares issuable upon exercise of options granted to Mr. Danford Smith, our former President and Chief Operating Officer, and Mr. Martin Trust, a board member.

37

Issuer Purchases of Equity Securities

Issuer Purchases of Equity Securities(1)

Period:	Total Number of Shares Purchased (#)		Average Price Paid per Share ($)		Total Number of Shares Purchased as Part of Publicly Announced Program (#)(2)(3)		Remaining Dollar Value that May Yet Be Purchased Under Our Program ($)(2)(3)
August 2008		335,100	$	7.54		335,100	$	12,473,346
September 2008		121,619		7.18		121,619		11,600,360
October 2008		—		—		—		—
November 2008		284,404		4.79		284,404		10,238,065
December 2008		338,900		4.54		338,900		8,699,459
January 2009		—		—		—		—
February 2009		—		—		—		—
March 2009		259,800		5.77		259,800		7,198,245
Total		1,339,823	$	5.82		1,339,823	$	7,198,245

(1)

On July 28, 2008, our Board of Directors authorized a share repurchase program of up to $15 million of our common stock, expiring July 28, 2009. Share repurchases under the program may be made through open market purchases or privately negotiated transactions in accordance with applicable federal securities laws, including Rule 10b-18 of the Exchange Act. Our program may be extended, suspended or discontinued at any time by our Board of Directors.

(2)

The shares repurchased exclude an aggregate of 69,428 shares of our common stock purchased in the open market by a member of our Board of Directors for his direct account, and 122,366 shares purchased by such director on behalf of an entity over which he has investment control, during the period from August 4, 2008 to December 15, 2008 at prices ranging from $4.55 to $7.48 per share. We do not consider such director as an "affiliated purchaser" within the meaning of Rule 10b-18 of the Exchange Act of 1934.

(3)

The shares repurchased exclude 2,500 shares of our common stock purchased in the open market directly by a member of our Board of Directors and 2,500 shares purchased by such member on behalf of an entity where the director's spouse is the general partner, each purchase was made on November 3, 2008 at a price of $5.42 per share. We do not consider such board member as an "affiliated purchaser" within the meaning of Rule 10b-18 of the Exchange Act of 1934.

Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities

(a) On August 8, 2007, we completed our initial public offering (the "IPO") of 4,400,000 shares of common stock at a public offering price of $14.00 per share which we offered for sale pursuant to a registration statement on Form S-1 as amended (File No. 333-141952). Such registration statement was declared effective by the SEC on August 2, 2007. Net proceeds of the IPO were approximately $52.8 million, after deducting underwriting discounts and commissions of approximately $4.3 million and offering fees and expenses of approximately $4.5 million, which includes legal, accounting and printing costs and various other fees associated with registration and listing of our common stock.

We have used and expect to use a portion of the net proceeds from our IPO to fund the construction and build-out of a new facility on our campus in Hyderabad, India, of which we have spent approximately $6.5 million in our fiscal year ended March 31, 2009 and plan to spend approximately $9.0 million during our fiscal years ending March 31, 2010 and 2011, respectively. The balance of the net proceeds will be used for working capital and other general corporate purposes, including to finance the investments in our

38

global delivery centers in Chennai, India and Colombo, Sri Lanka, the hiring of additional personnel, sales and marketing activities, capital expenditures, the costs of operating as a public company and possible strategic alliances or acquisitions.

(b) On February 4, 2009, Silicon Valley Bank exercised a warrant, issued by us on February 27, 2002, for an aggregate of 5,724 shares of our common stock giving effect to a net exercise provision in the warrant. The 5,724 shares were issued based on the exercise price of $5.48 per share (at an aggregate consideration of $119,316 for the gross shares exercised) and a fair market value per share of $7.43 (or an aggregate fair market value of $161,847 for the gross shares exercised), based on the closing price of our common stock on the NASDAQ Global Market on February 4, 2009. We issued the 5,724 shares of our common stock under Section 4(2) of the Securities Act (and/or Regulation D promulgated thereunder).

(c) On April 9, 2008, we issued an aggregate of 6,285 shares of our common stock upon the exercise of a warrant issued to Silicon Valley Bank on April 9, 2001, giving effect to a net and automatic exercise provision in the warrant. The 6,285 shares were issued based on the exercise price of $5.48 per share (or an aggregate consideration of $85,224 for the gross shares exercised) and a fair market value per share of $9.19 (or an aggregate fair market value of $142,987 for the gross shares exercised), based on the closing price of our common stock on the NASDAQ Global Market on April 9, 2008. We issued the 6,285 shares of our common stock under Section 4(2) of the Securities Act (and/or Regulation D promulgated thereunder).

Item 6.    Selected Financial Data.

The selected historical financial data set forth below as of March 31, 2009 and 2008 and for the fiscal years ended March 31, 2009, 2008 and 2007 are derived from our financial statements, which have been audited by KPMG LLP, our independent registered public accounting firm, and which are included elsewhere in this Annual Report on Form 10-K. The selected historical financial data as of March 31, 2007, 2006 and 2005 and for the fiscal years ended March 31, 2006 and 2005 are derived from our financial statements which are not included elsewhere in this Annual Report.

The following selected consolidated financial data should be read in conjunction with our consolidated financial statements, the related notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this Annual Report on Form 10-K. The historical results are not necessarily indicative of the results to be expected for any future period.

39

Consolidated statement of operations data

		Fiscal Year Ended March 31,
		2009		2008		2007			2006		2005
		(In thousands, except share and per share amounts)
Revenue		$	172,942	$	165,198	$	124,660		$	76,935	$	60,484
Costs of revenue			105,100		92,847		68,031			43,417		31,813
	Gross profit		67,842		72,351		56,629			33,518		28,671
Operating expenses			57,864		52,972		42,478			32,925		27,838
	Income from operations		9,978		19,379		14,151			593		833
Other income			2,888		3,249		1,209			1,564		376
	Income before income tax expense (benefit)		12,866		22,628		15,360			2,157		1,209
Income tax expense (benefit)			809		4,857		(3,630	)		176		99
	Net income	$	12,057	$	17,771	$	18,990		$	1,981	$	1,110
Net income per share of common stock
	Basic	$	0.53	$	0.83	$	1.09		$	0.12	$	0.07
	Diluted	$	0.50	$	0.76	$	1.03		$	0.11	$	0.06
	Weighted average number of common shares outstanding
	Basic		22,763,759		21,368,470		6,005,619			5,613,623		5,448,048
	Diluted		24,136,716		23,282,663		18,351,161			17,361,219		17,116,473

Note:    The net income per share calculations for the fiscal years ended March 31, 2007, 2006 and 2005 give effect to the automatic conversion of the redeemable convertible preferred stock into 11,425,786 shares of common stock upon the closing of the IPO on August 8, 2007. The decrease in net income and earnings per share in the fiscal year ended March 31, 2008 from the fiscal year ended March 31, 2007 is due to a one-time income tax benefit of $5.0 million in fiscal year 2007 caused by the release of our deferred tax asset valuation allowance.

Consolidated balance sheet data

	As of March 31,
	2009		2008		2007		2006			2005
	(In thousands)
Cash and cash equivalents	$	55,698	$	41,047	$	45,079	$	30,237		$	28,406
Working capital		94,823		108,808		65,765		41,696			35,436
Total assets		187,023		180,770		99,319		58,719			50,085
Redeemable convertible preferred stock		—		—		60,862		60,814			60,758
Total stockholders' equity (deficit)		152,586		155,834		19,259		(13,610	)		(17,899	)

Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations.

Business overview

We are a global information technology services company. We use an offshore delivery model to provide a broad range of IT services, including IT consulting, technology implementation and application outsourcing. Using our enhanced global delivery model, innovative platforming approach and industry expertise, we provide cost-effective services that enable our clients to use IT to enhance business

40

performance, accelerate time-to-market, increase productivity and improve customer service. Headquartered in Massachusetts, we have offices in the United States and the United Kingdom and global delivery centers in Hyderabad and Chennai, India and Colombo, Sri Lanka. At March 31, 2009, we had 3,764 employees, or team members, and for the fiscal year ended March 31, 2009, we had revenue of $172.9 million and income from operations of $10.0 million. In our fiscal year ended March 31, 2009, our revenue increased 5% to $172.9 million compared to $165.2 million in our fiscal year ended March 31, 2008. Net income decreased by $5.7 million to $12.1 million in our fiscal year ended March 31, 2009, as compared to $17.8 million in our fiscal year ended March 31, 2008.

The key drivers of our revenue growth in our fiscal year ended March 31, 2009 were as follows:

•

greater penetration of the North American market, where we experienced revenue growth of 10% in our fiscal year ended March 31, 2009 as compared to our fiscal year ended March 31, 2008

•

strong performance of our BFSI industry vertical, which had fiscal year-over-year growth of 22%, and our media and information and other industry vertical which had fiscal year-over-year growth of approximately 13%

•

increased penetration at existing clients

The key drivers of our decrease in net income in our fiscal year ended March 31, 2009 were as follows:

•

lower revenue contribution from our largest client

•

lower utilization and increased costs of revenue, particularly in the first half of the fiscal year ended March 31, 2009

•

substantial depreciation of the U.K. pound sterling against the U.S. dollar

High repeat business and client concentration is common in our industry. During our fiscal year ended March 31, 2009, 95% of our revenue was derived from clients who had been using our services for more than one year. Accordingly, our global account management and service delivery teams focus on expanding client relationships and converting new engagements to long-term relationships to generate repeat revenue and expand revenue streams from existing clients. We also have a dedicated business development team focused on generating engagements with new clients to continue to expand our client base, and over time, reduce client concentration.

Our European revenue decreased to $44.4 million, or 26% of total revenue, from $51.1 million, or 31% of total revenue for the fiscal years ended March 31, 2009 and March 31, 2008, respectively. The primary reasons for the decline in European revenue were due to lower revenue contribution by our largest client and substantial depreciation of the U.K. pound sterling against the U.S. dollar.

We perform our services under both time-and-materials and fixed-price contracts. Revenue from fixed-price contracts was 26%, 21%, and 14% of total revenue for the fiscal years ended March 31, 2009, 2008 and 2007, respectively. The increased revenue earned from fixed-price contracts reflects our clients' preferences.

As an IT services company, our revenue growth has been, and will continue to be, highly dependent on our ability to attract, develop, motivate and retain skilled IT professionals. There is intense competition for IT professionals with the skills necessary to provide the type of services we offer. We closely monitor our overall attrition rates and patterns to ensure our people management strategy aligns with our growth objectives. For the last twelve months ended March 31, 2009, our voluntary attrition rate was 22.9%, while our involuntary attrition rate was 12.7%. If our attrition rate increases and is sustained at higher levels, our growth may slow and our cost of attracting and retaining IT professionals could increase.

In our fiscal year ended March 31, 2008, we initiated a hedging strategy using forward contracts designed to hedge fluctuation in the Indian rupee against the U.S. dollar and U.K. pound sterling. Since inception,

41

the hedging programs have been effective at minimizing the impact from fluctuations in local currencies on operating results. However, there is no assurance that these hedging programs will continue to be effective.

We continually monitor and manage a number of operating metrics to ensure quality and reduce volatility in our earnings, including:

•

Days sales outstanding, or DSO, is a measure of the number of days our accounts receivable are outstanding based upon the last 90 days of revenue activity, which indicates the timeliness of our cash collection from clients and our overall credit terms to our clients. DSO was 70 days and 78 days as of March 31, 2009 and March 31, 2008, respectively. Higher DSO reduces our cash balance because the revenue-to-cash conversion process takes longer.

•

Realized billing rates are the rates we charge our clients for our services, which reflect the value our clients place on our services, market competition and the geographic location in which we perform our services. Our realized billing rates were relatively stable for our fiscal years ended March 31, 2009 and 2008. Any increase in realized billing rates is a result of our ability to successfully preserve or increase our billing rates with existing and/or new clients.

•

Average cost per IT professional is the sum of team member salaries, including variable compensation, and fringe benefits divided by the average number of IT professionals during the period. We experienced a decrease in our average cost per IT professional in Asia of 11% from our fiscal year ended March 31, 2008 to our fiscal year ended March 31, 2009, primarily driven by the year-over-year depreciation of the Indian rupee and Sri Lankan rupee against the U.S. dollar.

•

Utilization rate is the percentage of time billable IT professionals are deployed on client engagements, which indicates the efficiency of our billable IT resources. Our utilization rate is defined as number of billable hours divided by the total number of available hours of our IT professionals in a given period of time, excluding trainees. We track our utilization rates to measure revenue potential and gross profit margins. Management's targeted range for utilization is between 70% and 75%. Generally, gross margin moves directionally with utilization rate. Utilization is affected by the rate of quarterly sequential revenue growth. In growth periods, utilization tends to rise as more resources are deployed to meet rising demand.

•

Attrition rate is the ratio of terminated team members during the latest twelve months to the total number of team members at the end of such period, which measures team member turnover. Increased voluntary attrition rates result in increased hiring, training and boarding costs and productivity losses, which may affect our revenue, gross margin and operating profit margin. Our voluntary attrition rate was 22.9% while our involuntary attrition was 12.7% for the fiscal year ended March 31, 2009. Our voluntary attrition rate was 21.3% for our fiscal year ended March 31, 2008, while our involuntary attrition rate was immaterial for the same fiscal year.

•

Operating expense efficiency is a measure of operating expenses as a percentage of revenue. If we continue to successfully grow our revenue, we anticipate that operating expenses will decrease as a percentage of revenue as such expenses are absorbed across a larger revenue base. In the near term, however, any operating expense efficiency may decline if our revenue declines.

•

Effective tax rate is our worldwide tax expense as a percentage of our consolidated net income before tax, which measures the impact of income taxes worldwide on our operations and net income. We monitor and assess our effective tax rate to evaluate whether our tax structure is competitive as compared to our industry. Our effective tax rate was 6.3% for the fiscal year ended March 31, 2009 as compared to an effective tax rate of 21.5% for the fiscal year ended March 31, 2008. The decrease is primarily due to the change in the geographic mix of our profit. We anticipate that our effective tax rate will increase in our fiscal years ending after March 31, 2010 when our India STPI tax holiday expires.

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•

Onsite-to-offshore mix is the measurement of hours billed by resources located offshore to hours billed onsite by our team members over a defined period. We strive to manage both fixed-price contracts and time-and-materials engagements to a highly-efficient 20/80, or better, onsite-to-offshore service delivery team mix.

Sources of revenue

We generate revenue by providing IT services to our clients located primarily in the United States and the United Kingdom. We have historically earned and believe that over the next few years we will continue to earn a significant portion of our revenue from a limited number of clients. For the fiscal year ended March 31, 2009, our five largest and ten largest clients accounted for 54% and 73% of our revenue, respectively. Our three largest clients accounted for 19%, 13%, and 10%, respectively, of our revenue for the fiscal year ended March 31, 2009. The loss of any one of our major clients could reduce our revenue and operating profit and harm our reputation in the industry. During the fiscal year ended March 31, 2009, 72% of our revenue was generated in the United States and 26% in the United Kingdom. We provide IT services on either a time-and-materials or a fixed-price basis. For the fiscal year ended March 31, 2009, the percentage of revenue from time-and-materials and fixed-price contracts was 74% and 26%, respectively.

Revenue from services provided on a time-and-materials basis is derived from the number of billable hours in a period multiplied by the contractual rates at which we bill our clients. Revenue from services provided on a fixed-price basis is recognized as efforts are expended pursuant to the percentage-of-completion method. Revenue also includes reimbursements of travel and out-of-pocket expenses with equivalent amounts of expense recorded in costs of revenue. Most of our client contracts, including those that are on a fixed-price basis, can be terminated by our clients with or without cause on 30 to 90 days' prior written notice. All fees for services provided by us through the date of cancellation are generally due and payable under the contract terms.

Our unit pricing is driven by business need, delivery timeframes, complexity of the engagement, operating differences (such as onsite/offshore ratio), competitive environment and engagement size (or volume). As a pricing strategy to encourage clients to increase the volume of services that we provide to them, we may, on occasion, offer volume discounts. We manage our business carefully to protect our account margins and our overall profit margins. We find that our clients generally purchase on the basis of total value, rather than minimum cost, considering all of the factors listed above.

While we are subject to the effects of overall market pricing pressure, we believe that there is a fairly broad range of pricing offered by different competitors for each service we provide. We believe that no one competitor, or set of competitors, sets pricing in our industry. We find that our unit pricing, as a result of our global delivery model, is generally competitive with other firms who operate with a predominately offshore operating model.

The proportion of work performed at our offshore facilities and at onsite client locations varies from period-to-period. Effort, in terms of the percentage of hours billed to clients by onsite resources, was 16% and 17% of total hours billed in each of the fiscal years ended March 31, 2009 and 2008, respectively, while the revenue from onsite and offshore resources accounted for 44% and 56% and 46% and 54%, during the fiscal years ended March 31, 2009 and 2008, respectively. We charge higher rates and incur higher compensation costs and other expenses for work performed at client locations in the United States and the United Kingdom as compared to work performed at our global delivery centers in India and Sri Lanka. Services performed at client locations or at our offices in the United States or the United Kingdom generate higher revenue per-capita at lower gross margins than similar services performed at our global delivery centers in India and Sri Lanka. We manage to a 20/80, or better, onsite-to-offshore service delivery mix and intend to manage to an efficient onsite-to-offshore service delivery ratio for the foreseeable future.

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Costs of revenue and gross profit

Costs of revenue consist principally of payroll and related fringe benefits, reimbursable and non-reimbursable costs, immigration-related expenses, fees for subcontractors working on client engagements and share-based compensation expense for IT professionals including account management personnel.

Wage costs in India and Sri Lanka have historically been significantly lower than wage costs in the United States and Europe for comparably-skilled IT professionals. However, wages in India and Sri Lanka are increasing in local currency, which will result in increased costs for IT professionals, particularly project managers and other mid-level professionals. We may need to increase the levels of our team member compensation more rapidly than in the past to remain competitive without the ability to make corresponding increases to our billing rates. Compensation increases may reduce our profit margins, make us less competitive in pricing potential projects against those companies with lower cost resources and otherwise harm our business, operating results and financial condition. We deploy a campus hiring philosophy and encourage internal promotions to minimize the effects of wage inflation pressure and recruiting costs. Additionally, any material appreciation in the Indian or Sri Lankan rupee against the U.S. dollar or U.K. pound sterling could have a material adverse impact on our cost of services.

Our revenue and gross profit are also affected by our ability to efficiently manage and utilize our IT professionals, as well as fluctuations in foreign currency exchange rates. We define utilization rate as the total number of days billed in a given period divided by the total available days of our IT professionals during that same period, excluding trainees. We manage employee utilization by continually monitoring project requirements and timetables to efficiently staff our projects and meet our clients' needs. The number of IT professionals assigned to a project will vary according to the size, complexity, duration and demands of the project. An unanticipated termination or reduction of a significant project could cause us to experience a higher than expected number of unassigned IT professionals, thereby lowering our utilization rate. Although, we have adopted an eight quarter cash flow hedging program to minimize the effect of the Indian rupee movement on our financial condition, these hedges may not be effective or may cause us to forego benefits, especially given the volatility of these currencies. In addition, to the extent that these hedges do not qualify for hedge accounting, we may have to recognize gains or losses on the aggregate amount of hedges placed earlier than expected.

Operating expenses

Operating expenses consist primarily of payroll and related fringe benefits, commissions, selling, share-based compensation and non-reimbursable costs, as well as promotion, communications, management, finance, administrative, occupancy, marketing and depreciation and amortization expenses. In the fiscal years ended March 31, 2009, 2008 and 2007, we invested in all aspects of our business, including sales, marketing, IT infrastructure, facilities, human resources programs and financial operations. Additionally, any material appreciation in the Indian or Sri Lankan rupee against the U.S. dollar or U.K. pound sterling could have a material adverse impact on our cost of operating expenses. We have adopted an eight quarter hedging program to mitigate the effect of the Indian rupee on our cost of operating expenses, although such hedging program may be ineffective. Although, we have adopted an eight quarter cash flow hedging program to minimize the effect of the Indian rupee movement on our financial condition, these hedges may not be effective or may cause us to forego benefits, especially given the volatility of these currencies. In addition, to the extent that these hedges do not qualify for hedge accounting, we may have to recognize gains or losses on the aggregate amount of hedges placed earlier than expected.

Other income (expense)

Other income (expense) includes interest income, interest expense, investment gains and losses and foreign currency transaction gains and losses and disposal of fixed assets. We generate interest income by

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investing in money market instruments, short-term investments and long-term investments. The functional currencies of our subsidiaries are their local currencies. Foreign currency gains and losses are generated primarily by fluctuations of the Indian rupee, Sri Lankan rupee and U.K. pound sterling against the U.S. dollar on intercompany transactions. We place our cash in liquid investments at highly-rated financial institutions. We believe that our credit policies reflect normal industry terms and business risk.

Income tax expense (benefit)

Our net income is subject to income tax in those countries in which we perform services and have operations, including India, Sri Lanka, the United Kingdom and the United States. In previous years, we accumulated net operating loss carry-forwards which were used to offset U.S. taxable income into fiscal 2008. We have benefited from long-term income tax holiday arrangements in both India and Sri Lanka that are offered to certain export-oriented IT services firms. As a result of these net operating losses and tax holiday arrangements, our worldwide profit has been subject to a relatively low effective tax rate as compared to the statutory rates in the countries in which we operate. The effect of the income tax holidays increased our net income in the fiscal years ended March 31, 2009 and 2008 by $4.5 million and $3.9 million, respectively.

Our effective tax rates were 6.3% and 21.5% for the fiscal years ended March 31, 2009 and 2008, respectively. During the fiscal year ended March 31, 2007, we determined that it was more likely than not that our deferred tax assets would be realized based upon our positive cumulative operating results and our assessment of our expected future results. As a result, we released our valuation allowance and recognized a discrete income tax benefit of $5.0 million in our statement of income for the fiscal year ended March 31, 2007. Our effective tax rate in future periods will be affected by the geographic distribution of our earnings, as well as the availability of tax holidays in India and Sri Lanka.

Application of critical accounting estimates and risks

Our consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles, or GAAP. Preparation of these financial statements requires us to make estimates and assumptions that affect the reported amount of revenue and expenses, assets and liabilities and the disclosure of contingent assets and liabilities. We consider an accounting estimate to be critical to the preparation of our financial statements when both of the following are present:

•

the estimate is complex in nature or requires a high degree of judgment; and

•

the use of different estimates and assumptions could have a material impact on the consolidated financial statements.

We have discussed the development and selection of our critical accounting estimates and related disclosures with the audit committee of our board of directors. Those estimates critical to the preparation of our consolidated financial statements are listed below.

Revenue recognition

Our revenue is derived from a variety of IT consulting, technology implementation and application outsourcing services. Our services are performed under both time-and-material and fixed-price arrangements. All revenue is recognized pursuant to GAAP. Revenue is recognized as work is performed and amounts are earned in accordance with the SEC Staff Accounting Bulletin, or SAB, No. 101, Revenue Recognition in Financial Statements, as amended by SAB No. 104, Revenue Recognition. We consider amounts to be earned once evidence of an arrangement has been obtained, services are delivered, fees are fixed or determinable and collectability is reasonably assured. For contracts with fees billed on a time-and-materials basis, we generally recognize revenue as the service is performed.

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Fixed-price engagements are accounted for under the percentage-of-completion method in accordance with the American Institute of Certified Public Accountants Statement of Position, or SOP, 81-1, Accounting for Performance of Construction-Type and Certain Production-Type Contracts. Under the percentage-of-completion method, we estimate the percentage-of-completion by comparing the actual number of work days performed to date to the estimated total number of days required to complete each engagement. The use of the percentage-of-completion method requires significant judgment relative to estimating total contract revenue and costs to completion, including assumptions and estimates relative to the length of time to complete the project, the nature and complexity of the work to be performed and anticipated changes in other engagement-related costs. Estimates of total contract revenue and costs to completion are continually monitored during the term of the contract and are subject to revision as the contract progresses. Unforeseen circumstances may arise during an engagement requiring us to revise our original estimates and may cause the estimated profitability to decrease. When revisions in estimated contract revenue and efforts are determined, such adjustments are recorded in the period in which they are first identified.

Valuation and impairment of investments and/or marketable securities

Our investments and/or marketable securities are accounted for according to Statement of Financial Accounting Standards ("SFAS") No. 115, Accounting for Certain Investments in Debt and Equity Securities ("SFAS No. 115"). Pursuant to SFAS No. 115, we classify our marketable securities as available-for-sale or trading securities, and carry them at fair market value. Changes in fair value subsequent to the balance sheet date are recorded in the period they occur. The difference between amortized cost and fair market value, net of tax effect, for available-for-sale securities is recorded as a separate component of stockholders' equity. The difference between amortized cost and fair market value for trading securities is reflected in "other income, net" on our consolidated statement of operations. Investments and/or marketable securities classified as available-for-sale are considered to be impaired when a decline in fair value below cost basis is determined to be other than temporary. In the event that the cost basis of a security exceeds its fair value, we evaluate, among other factors: the duration of the period that, and extent to which, the fair value is less than cost basis, the financial health of the business outlook for the issuer, including industry and sector performance, and operational and financing cash flow factors, overall market conditions and trends, and our intent and ability to hold the investment. Once a decline in fair value is determined to be other than temporary, a write-down is recorded through earnings. Assessing the above factors involves inherent uncertainty. Accordingly, write-downs, if recorded, could be materially different from the actual market performance of investments and/or marketable securities in our portfolio, if, among other things, relevant information related to our investments and/or marketable securities was not publicly available or other factors not considered by us would have been relevant to the determination of impairment.

Our investments in auction rate securities and the related Put Option are valued primarily based on an income approach using an estimate of future cash flows because there are currently no active markets or observable market prices. We have estimated the fair value using a discounted cash flow analysis which considered the following key inputs: (i) the underlying structure and maturity of each security; (ii) the timing of expected future principal and interest payments; and (iii) discount rates that are believed to reflect current market conditions and the relevant risk associated with each security.

Derivative instruments and hedging activities

We enter into forward foreign exchange contracts to mitigate the risk of changes in foreign exchange rates on inter-company transactions and forecasted transactions denominated in foreign currencies. Certain of these transactions meet the criteria for hedge accounting as cash flow hedges under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. Changes in the fair values of these hedges are deferred and recorded as a component of accumulated other comprehensive income (losses), net of tax

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until the hedged transactions occur and are then recognized in the statement of income. Changes in the fair value for other derivative contracts and the ineffective portion of hedging instruments are recognized in the statement of income of each period and are included in foreign exchange (gains) losses, net and other income (expense), net, respectively. We value our derivatives based on market observable inputs including both forward and spot prices for currencies. Any significant change in the forward or spot prices for currencies would have a significant impact on the value of our derivatives.

Income taxes

The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax regulations in multiple jurisdictions. We record liabilities for estimated tax obligations in the United States and other tax jurisdictions. Determining the consolidated provision for income tax expense, tax reserves, deferred tax assets and liabilities and related valuation allowance, if any, involves judgment. We calculate and provide for income taxes in each of the jurisdictions in which we operate, including India, Sri Lanka, the United States, the United Kingdom, and the Netherlands, and this can involve complex issues which require an extended period of time to resolve. In the year of any such resolution, additional adjustments may need to be recorded that result in increases or decreases to income. Our overall effective tax rate fluctuates due to a variety of factors, including arm's-length prices for our intercompany transactions, changes in the geographic mix or estimated level of annual pretax income, as well as newly enacted tax legislation in each of the jurisdictions in which we operate.

Applicable transfer pricing regulations require that transactions between and among our subsidiaries be conducted at an arm's-length price. On an ongoing basis, we estimate appropriate arm's-length prices and use such estimates for our intercompany transactions.

At each financial statement date we evaluate whether a valuation allowance is needed to reduce our deferred tax assets to the amount that is more likely than not to be realized. This evaluation considers the weight of all available evidence, including both future taxable income and ongoing prudent and feasible tax planning strategies. In the event that we determine that we will not be able to realize a recognized deferred tax asset in the future, an adjustment to the valuation allowance would be made resulting in a decrease in income in the period such determination was made. Likewise, should we determine that we will be able to realize all or part of an unrecognized deferred tax asset in the future, an adjustment to the valuation allowance would be made resulting in an increase to income (or equity in the case of excess stock option tax benefits).

We have benefited from long-term income tax holiday arrangements in both India and Sri Lanka. One of our Indian subsidiaries is an export-oriented company that is entitled to claim a tax exemption for a period of ten years for each Software Technology Park, or STP, it operates. Both of our STP holidays will be completely phased out by March 2010 and, at that time, any profits could be fully taxable at the Indian statutory rate, which is currently 34%. During the fiscal year ended March 31, 2009 most of our profits in India were generated from our STPs. Although we believe we have complied with, and are eligible for, the STP holidays, it is possible that upon examination the government of India may deem us ineligible for the STP holidays or make adjustments to the profit level. We have located new development centers in areas designated as Special Economic Zones, or SEZs, to secure additional tax exemptions for these operations for a period of ten years, which could extend to 15 years if we meet certain reinvestment requirements. Our Sri Lankan subsidiary has been granted an income tax holiday by the Sri Lanka Board of Investment which expires on March 31, 2019. The tax holiday is contingent upon a certain level of job creation by us during a given timetable. Any inability to meet the agreed upon level or timetable for new job creation would jeopardize the benefits from this holiday arrangement. Primarily as a result of these tax holiday arrangements, our worldwide profit has been subject to a relatively low effective tax rate, and the loss of any of these arrangements would increase our overall effective tax rate.

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It is our intent to reinvest all accumulated earnings from India and Sri Lanka back into their respective operations to fund growth. As a component of this strategy, pursuant to Accounting Principles Board Opinion No. 23, Accounting for Income Taxes-Special Areas, we do not accrue incremental U.S. taxes on Indian, Sri Lanka, or U.K. earnings as these earnings are considered to be permanently or indefinitely reinvested outside of the United States. If such earnings were to be repatriated in the future or are no longer deemed to be indefinitely reinvested, we will accrue the applicable amount of taxes associated with such earnings, which would increase our overall effective tax rate.

Share-based compensation

Under the fair value recognition provisions of SFAS No. 123R, Share-Based Payment, share-based compensation cost is measured at the grant date based on the value of the award and is recognized over the vesting period. Determining the fair value of the share-based awards at the grant date requires judgment, including estimating the expected term over which stock options will be outstanding before they are exercised, the expected volatility of our stock, the number of share-based awards that are expected to be forfeited and due to a recent tax law change in India, the expected exercise proceeds for share-based awards subject to the Indian fringe benefit tax. If actual results differ significantly from our estimates, share-based compensation expense and our results of operations could be materially impacted.

Effective April 1, 2007, a new fringe benefit tax was introduced in India that obligates us to pay, upon the exercise or distribution of shares under a stock-based compensation award, a non-income related tax on the appreciation of the award from date of grant to the date of total vesting. We intend to collect the cash amount of the fringe benefit tax from our team members. However under GAAP, the stock-based Indian fringe benefit tax expense is required to be recorded as an operating expense and the related cash recovery of such tax from our team members is required to be recorded to stockholders' equity as proceeds from a stock-based compensation award. Our future operating results may experience volatility as a result of the timing of exercise or distribution of shares related to stock-based compensation awards to our team members who worked or are working in India. The amount of stock-based Indian fringe benefit tax expense recorded during our fiscal year ended March 31, 2009 was immaterial.

We established a stock appreciation rights plan, or SAR Plan, during the fiscal year ended March 31, 2006. Prior to our IPO in August 2007, under the terms of the SAR Plan, all stock appreciation rights, or SARs, were settled in cash and the compensation cost and future liability for these SARs were determined using the fair value at the grant date and remeasuring the fair value of the vested SARs at the close of each reporting period. After our IPO, we are obligated under the SAR Plan to settle all SARs in shares of our common stock. Therefore, the SARs are now equity classified and are no longer remeasured. The liability measured as of our IPO date was $1.4 million and this amount has been reclassified as a component of additional paid in capital subsequent to our IPO.

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Results of operations

Fiscal year ended March 31, 2009 compared to fiscal year ended March 31, 2008

The following table presents an overview of our results of operations for the fiscal years ended March 31, 2009 and 2008:

		Fiscal Year Ended March 31,
		2009		2008		$ Change			% Change
		(Dollars in thousands)
Revenue		$	172,942	$	165,198	$	7,744			4.7	%
Costs of revenue			105,100		92,847		12,253			13.2
	Gross profit		67,842		72,351		(4,509	)		(6.2	)
Operating expenses			57,864		52,972		4,892			9.2
	Income from operations		9,978		19,379		(9,401	)		(48.5	)
Other income			2,888		3,249		(361	)		(11.1	)
	Income before income tax expense		12,866		22,628		(9,762	)		(43.1	)
Income tax expense			809		4,857		(4,048	)		(83.3	)
	Net income	$	12,057	$	17,771	$	(5,714	)		(32.2	)%

Revenue

Revenue increased by 4.7%, or $7.7 million, from $165.2 million during the fiscal year ended March 31, 2008 to $172.9 million in the fiscal year ended March 31, 2009. This increase is primarily attributed to greater demand for our IT services delivered through our global model, partially offset by the negative impact of the depreciation of the U.K. pound sterling against the U.S. dollar of $8.8 million for the fiscal year ended March, 31, 2009, net of a $1.6 million gain from hedging contracts on our U.K. revenue. Revenue from clients existing as of March 31, 2008 decreased in the fiscal year ended March 31, 2009 by $1.2 million and revenue from new clients added since March 31, 2008 was $8.9 million, or 5% of total revenue, for the fiscal year ended March 31, 2009. In addition, revenue from European clients in the fiscal year ended March 31, 2009 decreased by $6.8 million, or 13%, as compared to the fiscal year ended March 31, 2008. However, excluding BT, our largest European client, our European revenue increased by $5.7 million, or 89%, in the fiscal year ended March 31, 2009 as compared to the fiscal year ended March 31, 2008. Revenue from North American clients increased by $11.1 million, or 10%, as compared to the fiscal year ended March 31, 2008. In addition, our BFSI industry vertical experienced revenue growth of 22%, our communications and technology industry vertical experienced decreased revenue of 16%, and our media and information industry vertical experienced revenue growth of 6%, in the fiscal year ended March 31, 2009 as compared to the fiscal year ended March 31, 2008. We had 56 active clients as of March 31, 2009 and 2008, respectively.

Costs of revenue

Costs of revenue increased from $92.8 million in the fiscal year ended March 31, 2008 to $105.1 million in the fiscal year ended March 31, 2009, an increase of $12.3 million, or 13.2%. A significant portion of the increase was attributable to additional compensation and benefits costs of $7.8 million due to a higher concentration of onsite IT professionals in the United States and United Kingdom during the first half of the fiscal year ended March 31, 2009. There were also increases in professional services fees, including subcontractor costs, of $1.0 million, and losses of $2.8 million recorded on foreign currency forward contracts as part of our hedging program, which were offset by lower Indian rupee denominated expenses caused by depreciation of the Indian rupee against the U.S. dollar and U.K. pound sterling, in the fiscal year ended March 31, 2009 as compared to the fiscal year ended March 31, 2008.

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Gross profit

Our gross profit decreased by $4.5 million or 6.2%, to $67.8 million for the fiscal year ended March 31, 2009 as compared to $72.4 million in the fiscal year ended March 31, 2008. The principal reason for our decrease in gross profit during the fiscal year ended March 31, 2009 as compared to the fiscal year ended March 31, 2008 was due to an increase in cost of revenue. As a percentage of revenue, gross profit margin was 39.2% and 43.8% in the fiscal years ended March 31, 2009 and 2008, respectively. The principal reason for our decrease in gross profit margin during the fiscal year ended March 31, 2009 as compared to the fiscal year ended March 31, 2008, was primarily due to an increase in our compensation costs relative to the increase in revenue and lower utilization in the first half of the fiscal year ended March 31, 2009.

Operating expenses

Operating expenses increased from $53.0 million in the fiscal year ended March 31, 2008 to $57.9 million in the fiscal year ended March 31, 2009, an increase of $4.9 million, or 9.2%. The increase in operating expenses was due to an increase of $1.1 million in share-based compensation expense associated with our non-IT professionals, $1.3 million in infrastructure expenses in Asia, $1.0 million in incremental costs associated with being a public company, and increased travel costs of $0.6 million. These increases in expense were partially offset by a decrease in recruiting fees of $0.6 million during the fiscal year ended March 31, 2009 as compared to the fiscal year ended March 31, 2008. In the fiscal year ended March 31, 2009, we recorded additional foreign currency forward contract losses of $1.3 million as part of our hedging program as compared to the fiscal year ended March 31, 2008. These losses were offset by lower Indian rupee denominated expenses caused by depreciation of the Indian rupee against the U.S. dollar and U.K. pound sterling in the period. As a percentage of revenue, our operating expenses increased from 32.1% in the fiscal year ended March 31, 2008 to 33.4% in the fiscal year ended March 31, 2009.

Income from operations

Income from operations decreased from $19.4 million in the fiscal year ended March 31, 2008 to $10.0 million in the fiscal year ended March 31, 2009, a decrease of $9.4 million or 48.5%. This decrease in income from operations resulted primarily from lower gross profit and increased operating expenses. As a percentage of revenue, income from operations decreased from 11.7% in the fiscal year ended March 31, 2008 to 5.8% in the fiscal year ended March 31, 2009.

Other income

Other income decreased from $3.2 million in the fiscal year ended March 31, 2008 to $2.9 million in the fiscal year ended March 31, 2009. The decrease is primarily attributed to a decrease in interest income of $1.3 million in the fiscal year ended March 31, 2009, primarily due to lower interest rates, as compared to March 31, 2008. There were also increases of foreign currency transaction losses of $0.6 million, which were partially offset by a gain of $1.6 million on a foreign currency hedge contract of the U.K. pound sterling against the U.S dollar in the fiscal year ended March 31, 2009 as compared to the fiscal year ended March 31, 2008.

Income tax expense

We had income tax expense of $4.9 million in the fiscal year ended March 31, 2008 compared to $0.8 million in the fiscal year ended March 31, 2009. Our effective tax rate was 6.3% for the fiscal year ended March 31, 2009 as compared to an effective tax rate of 21.5% for the fiscal year ended March 31, 2008. This reduction is primarily due to the geographic mix of our profit.

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Net income

Net income decreased from $17.8 million in the fiscal year ended March 31, 2008 to $12.1 million in the fiscal year ended March 31, 2009. This decrease was driven primarily by lower operating income during the fiscal year ended March 31, 2009 as compared to the fiscal year ended March 31, 2008.

Fiscal year ended March 31, 2008 compared to fiscal year ended March 31, 2007

The following table presents an overview of our results of operations for the fiscal years ended March 31, 2008 and 2007:

		Fiscal Year Ended March 31,
		2008		2007			$ Change			% Change
		(Dollars in thousands)
Revenue		$	165,198	$	124,660		$	40,538			32.5	%
Costs of revenue			92,847		68,031			24,816			36.5
	Gross profit		72,351		56,629			15,722			27.8
Operating expenses			52,972		42,478			10,494			24.7
	Income from operations		19,379		14,151			5,228			36.9
Other income			3,249		1,209			2,040			168.7
	Income before income tax expense (benefit)		22,628		15,360			7,268			47.3
Income tax expense (benefit)			4,857		(3,630	)		8,487			(233.8	)
	Net income	$	17,771	$	18,990		$	(1,219	)		(6.4	)%

Revenue

Revenue increased by 32.5%, or $40.5 million, from $124.7 million during the fiscal year ended March 31, 2007 to $165.2 million in the fiscal year ended March 31, 2008. This increase was primarily attributed to greater demand for our IT services delivered through our global model. Revenue from clients existing as of March 31, 2007 increased in the fiscal year ended March 31, 2008 by $34.3 million and revenue from new clients added since March 31, 2007 was $6.2 million or 3.8% of total revenue for the fiscal year ended March 31, 2008. In addition, revenue from European clients in the fiscal year ended March 31, 2008 increased by $19.2 million, or 60%, as compared to the fiscal year ended March 31, 2007. Revenue from North American clients increased by $21.1 million, or 23%, as compared to the fiscal year ended March 31, 2007. We had 56 active clients as of March 31, 2008 as compared to 41 active clients as of March 31, 2007. In addition, we experienced strong demand across all of our industry verticals for an increasingly broad range of services, with our BFSI and communications and technology industry verticals experiencing fiscal year-over-year revenue growth of 43% and 34%, respectively.

Costs of revenue

Costs of revenue increased from $68.0 million in the fiscal year ended March 31, 2007 to $92.8 million in the fiscal year ended March 31, 2008, an increase of $24.8 million, or 36.5%. A significant portion of the increase was attributable to an increase in the number of our IT professionals to support revenue growth, from 3,312 as of March 31, 2007 to 4,036 as of March 31, 2008, which resulted in additional compensation and benefits costs of $22.1 million. The net effects of a weaker U.S. dollar against the Indian rupee during the fiscal year ended March 31, 2008, as compared to the fiscal year ended March 31, 2007, also increased our costs of revenue by approximately $3.7 million which were partially offset by $0.2 million gain recorded on foreign currency forward contracts as part of our hedging program. These increases were partially offset by a decrease in share-based compensation expense of $0.6 million and a decrease in subcontractors costs

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of $0.7 million in the fiscal year ended March 31, 2008 as compared to the fiscal year ended March 31, 2007.

Gross profit

Our gross profit increased by $15.7 million or 27.8%, to $72.4 million for the fiscal year ended March 31, 2008 as compared to $56.6 million in the fiscal year ended March 31, 2007, was primarily driven by higher utilization rates. As a percentage of revenue, gross margin was 43.8% and 45.4% in the fiscal years ended March 31, 2008 and 2007, respectively.

Operating expenses

Operating expenses increased from $42.5 million in the fiscal year ended March 31, 2007 to $53.0 million in the fiscal year ended March 31, 2008, an increase of $10.5 million, or 24.7%. The increase in our operating expenses in absolute dollars was due to the increase of $3.4 million in compensation and benefit costs and $0.7 million in share-based compensation expense associated with our non-IT professionals and an additional $3.9 million in infrastructure expenses to accommodate the increase in the number of IT professionals in Asia. In addition, operating expenses during the fiscal year ended March 31, 2008 increased by $0.6 million from the fiscal year ended March 31, 2007 with respect to the incremental non-payroll costs associated with being a public company. The net effects of a weaker U.S. dollar against the Indian rupee during the fiscal year ended March 31, 2008, as compared to the fiscal year ended March 31, 2007, also increased our operating expenses by approximately $1.9 million. These increases were partially offset by the $0.1 million gain recorded on foreign currency forward contracts as part of our hedging program. As a percentage of revenue, our operating expenses decreased from 34.1% in the fiscal year ended March 31, 2007 to 32.1% in the fiscal year ended March 31, 2008.

Income from operations

Income from operations increased from $14.2 million in the fiscal year ended March 31, 2007 to $19.4 million in the fiscal year ended March 31, 2008, an increase of $5.2 million or 36.9%. This increase in income from operations resulted from higher overall gross profit and lower operating expenses as a percentage of revenue. As a percentage of revenue, income from operations increased marginally from 11.4% in the fiscal year ended March 31, 2007 to 11.7% in the fiscal year ended March 31, 2008, primarily due to our lower operating expenses as a percentage of revenue, offset by a lower gross margin.

Other income

Other income increased from $1.2 million in the fiscal year ended March 31, 2007 to $3.2 million in the fiscal year ended March 31, 2008. The increase was primarily attributed to an increase in interest income of $2.7 million, from $1.2 million in the fiscal year ended March 31, 2007 to $3.9 million in the fiscal year ended March 31, 2008, partially offset by the increase in foreign currency transaction losses of $0.8 million, primarily due to the effects of a weaker U.S. dollar against the Indian rupee and losses from our hedging program in the period. The increase in interest income was due to an increase in average cash and cash equivalents and our investment balances during the fiscal year ended March 31, 2008 as a result of our IPO, when compared to the fiscal year ended March 31, 2007.

Income tax expense (benefit)

We had an income tax (benefit) of $(3.6) million in the fiscal year ended March 31, 2007 compared to an income tax expense of $4.9 million in the fiscal year ended March 31, 2008. Our effective tax rate was an income tax (benefit) rate of (23.6%) for the fiscal year ended March 31, 2007, which was largely due to the recognition of a discrete income tax benefit of approximately $5.0 million due to the release of our

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deferred tax asset valuation allowance in our statement of income during the fiscal year ended March 31, 2007, as compared to an effective tax rate of 21.5% for the fiscal year ended March 31, 2008.

Net income

Net income decreased from $19.0 million in the fiscal year ended March 31, 2007 to $17.8 million in the fiscal year ended March 31, 2008. This decrease was driven primarily by the recognition of a discrete income tax benefit due to the release of our deferred tax asset valuation allowance during the fiscal year ended March 31, 2007, which offset an increase in income from operations and other income during the fiscal year ended March 31, 2008.

Liquidity and capital resources

We completed an IPO of our common stock on August 8, 2007. In connection with our IPO, we issued and sold 4,400,000 shares of common stock at a public offering price of $14.00 per share. We received net proceeds of $52.8 million after deducting underwriting discounts and commissions of $4.3 million and offering costs of $4.5 million.

We have financed our operations from sales of shares of equity securities, including preferred and common stock and from cash from operations. We have not borrowed against our existing or preceding credit facilities.

As of March 31, 2009, we had cash and cash equivalents and short-term investments of $79.0 million, of which $11.3 million was held outside the United States. We have a $3.0 million revolving line of credit with a bank. This facility provides a $1.5 million sub-limit for letters of credit. The revolving line of credit also includes a foreign exchange line of credit requiring 15% of the notional amount of foreign exchange contracts to be supported by our borrowing base. Advances under our credit facility accrue interest at an annual rate equal to 2.5% plus the greater of (i) the prime rate or (ii) 3.25%. Our credit facility is secured by certain U.S. assets in favor of the bank and contains financial and reporting covenants and limitations. We are currently in compliance with all covenants contained in our credit facility and believe that our credit facility provides sufficient flexibility so that we will remain in compliance with its terms. We currently have a $0.3 million outstanding letter of credit under the facility to collateralize our office lease in Westborough, MA. As of March 31, 2009, we have no other amounts outstanding under this credit facility. We are currently renegotiating our credit facility, which expires on June 29, 2009. There were foreign currency derivative contracts with a notional amount of $57.6 million outstanding at March 31, 2009, some of which we purchased through the bank with whom we have our credit facility and have collateralized under such facility. In addition, we have purchased the remaining balance of our foreign currency derivative contracts through another bank and have pledged $2.5 million as restricted cash as security supporting these derivative contracts.

We believe that our available cash and cash equivalents, short-term investments and cash flows expected to be generated from operations will be adequate to satisfy our current and planned operations for at least the next twelve months. Our ability to expand and grow our business in accordance with current plans and to meet our long-term capital requirements will depend on many factors, including the rate, if any, at which our cash flow increases, our continued intent not to repatriate earnings from India and Sri Lanka and the availability of public and private debt and equity financing. Any funds held at locations outside the United States are for future operating expenses and expansion of our business, and we have no intention of repatriating those funds. To the extent we decide to pursue one or more significant strategic acquisitions, we may incur debt or sell additional equity to finance those acquisitions, although we can make no assurance that such financing alternatives will be available, or available in favorable terms.

In November 2008, we entered into an agreement with UBS ("UBS"), the investment firm that had sold us auction-rate securities at a par value of $6.7 million. Under the agreement with UBS, we (1) received the right (the "Put Option") to sell these auction-rate securities back to UBS at par, at our sole discretion, any

53

time during the period from June 30, 2010 through July 2, 2012, and (2) gave UBS the right to purchase these auction-rate securities or sell these securities on our behalf at par any time after the execution of the agreement through July 2, 2012. We elected to measure the Put Option under the fair value option of Statement of Financial Accounting Standards No. 159, and recorded a gain of $1.2 million, and recorded a corresponding long term asset. As a result of entering into an agreement with UBS, we recognized an other-than-temporary impairment loss of $1.2 million on the related auction-rate security investments. Simultaneously, we transferred these auction-rate securities from available-for-sale to trading investment securities. The recording of the Put Option and the recognition of the other-than-temporary impairment loss did not impact the consolidated statement of operations for the fiscal year ended March 31, 2009. Subsequent changes in the fair value of the Put Option have been offset by the changes in the fair value of the related auction-rate securities with no material net impact to the consolidated statement of operations which we expect will continue in the future.

Beginning in fiscal 2009, our U.K. subsidiary entered into an agreement with an unrelated financial institution to sell, without recourse, certain of its European-based accounts receivable balances from one client to such third party financial institution. During the course of fiscal 2009, $4.0 million of receivables were sold under the terms of the financing agreement. Fees paid pursuant to this financing agreement were immaterial during the current fiscal year. No amounts were due as of March 31, 2009, but we may elect to utilize this program again in future periods. However, we cannot provide any assurances that this or any other financing facilities will be available or utilized in the future.

Anticipated capital expenditures

We are constructing a facility as part of a planned campus on a 6.3 acre site in Hyderabad, India. We intend to continue the construction and build out of this facility over the next two fiscal years, which will be approximately 340,000 square feet, at a total estimated cost of $22.7 million, of which we anticipate spending approximately $5.5 million during the fiscal year ending March 31, 2010. Through March 31, 2009, we have spent $13.7 million toward the completion of this facility with approximately $6.5 million spent during the fiscal year ended March 31, 2009. Other capital expenditures during the fiscal year ended March 31, 2009 were approximately $4.8 million. We expect other capital expenditures in the normal course of business during the fiscal year ended March 31, 2010 to be approximately $4.0 million, primarily for leasehold improvements, capital equipment and purchased software.

On July 28, 2008, our board of directors authorized a share repurchase program of up to $15 million of shares of our common stock through July 28, 2009. Share repurchases under the program may be made through open market purchases or privately negotiated transactions in accordance with applicable federal securities laws, including Rule 10b-18 of the Securities Exchange Act of 1934, as amended. While our board of directors has approved the share purchasing guidelines, the timing of repurchases and the exact number of shares of common stock to be purchased will be determined by our management, at their discretion, and will depend upon market conditions and other factors. We have funded the program by using our cash on hand and cash generated from operations. We may extend, suspend or discontinue the program at any time. During the fiscal year ended March 31, 2009, we purchased 1,339,823 shares of our common stock for an aggregate purchase price of approximately $7.8 million, representing an average purchase price per share of $5.82. We have recorded repurchased shares as treasury shares and we will hold these shares in treasury until our board of directors designates that these shares be retired or used for other purposes.

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Cash flows

The following table summarizes our cash flows for the periods presented:

	Fiscal Year Ended March 31,
	2009			2008			2007
	(In thousands)
Net cash provided by operating activities	$	25,611		$	13,440		$	11,120
Net cash used for investing activities		(3,470	)		(73,147	)		(6,364	)
Net cash provided by (used for) financing activities		(5,190	)		55,434			9,843
Effect of exchange rate on cash		(2,300	)		241			243
Net increase (decrease) in cash and cash equivalents		14,651			(4,032	)		14,842
Cash and cash equivalents, beginning of fiscal year		41,047			45,079			30,237
Cash and cash equivalents, end of fiscal year	$	55,698		$	41,047		$	45,079

Net cash provided by operating activities

Net cash provided by operating activities was $25.6 million during the fiscal year ended March 31, 2009 as compared to $13.4 million during the fiscal year ended March 31, 2008. This increase was attributable to a decreased change in operating assets and an increased change in liabilities totaling $13.0 million and $10.5 million, respectively, and an increase in unrealized losses on derivative contracts of $5.7 million, partially offset by a decrease in net income of $5.7 million.

Net cash provided by operating activities was $13.4 million during the fiscal year ended March 31, 2008 as compared to $11.1 million during the fiscal year ended March 31, 2007. This increase was attributable to a decrease in our trade accounts receivable by $6.1 million as a result of our increased collection efforts, a decrease in deferred income taxes of $5.4 million, an increase in accrued compensation and benefits of $1.1 million and an increase in depreciation and amortization of $0.7 million during the fiscal year ended March 31, 2008 as compared to the fiscal year ended March 31, 2007. These sources of cash were partially offset by decreases in net income of $1.2 million, an increase in prepaid and other current assets of $3.3 million, an increase in other long-term assets of $3.8 million and a decrease in accounts payable of $2.8 million during the fiscal year ended March 31, 2008 as compared to the fiscal year ended March 31, 2007.

Net cash used for investing activities

Net cash used for investing activities was $3.5 million during the fiscal year ended March 31, 2009 as compared to $73.1 million during the fiscal year ended March 31, 2008. The decrease was due primarily to the net change in investment securities of $64.2 million resulting from our initial investments of our IPO proceeds and excess cash during the fiscal year ended March 31, 2008.

Net cash used for investing activities was $73.1 million during the fiscal year ended March 31, 2008 as compared to $6.4 million during the fiscal year ended March 31, 2007. The increase was due to investments of cash and IPO proceeds into short-term investments of $79.8 million and long-term investments of $23.9 million, partially offset by proceeds from the sale or maturity of short-term investments of $40.9 million and long-term investments of $4.7 million. Additionally, we invested $12.5 million in facilities and equipment including $7.2 million on our Hyderabad campus during the fiscal year ended March 31, 2008, as compared to total capital expenditures of $6.0 million during the fiscal year ended March 31, 2007. There was also an increase in restricted cash of $1.8 million in the fiscal year ended March 31, 2008 as compared to the fiscal year ended March 31, 2007. Further, we received proceeds from the sale of equity investments of $0.5 million in the fiscal year ended March 31, 2007, with no such transaction in the fiscal year ended March 31 2008.

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Net cash provided by (used for) financing activities

Net cash used for financing activities was $5.2 million during the fiscal year ended March 31, 2009, as compared to $55.4 million provided by financing activities during the fiscal year ended March 31, 2008. The change in net cash used for the fiscal year ended March 31, 2009 as compared to the fiscal year ended March 31, 2008 was due to expenditures of $7.8 million to repurchase our common stock, which was partially offset by proceeds from stock option exercises of $2.2 million. In addition, during the fiscal year ended March 31, 2008, we had net proceeds of $52.8 million from the completion of our IPO.

Net cash provided by financing activities was $55.4 million during the fiscal year ended March 31, 2008, as compared to $9.8 million during the fiscal year ended March 31, 2007. The increase was due to the net proceeds from our IPO of $52.8 million during the fiscal year ended March 31, 2008 as compared to proceeds from the sale of common stock of $11.0 million, net of expenses, during the fiscal year ended March 31, 2007. In addition, we received proceeds of $0.4 million from stock option exercises during the fiscal year ended March 31, 2008 as compared to proceeds of $0.5 million from other stock sales and stock option exercises during the fiscal year ended March 31, 2007. We also recognized tax benefits of $0.4 million on stock option exercises during the fiscal year ended March 31, 2008. This increase was partially offset by the $7.0 million of cash used to fund our IPO during the fiscal year ended March 31, 2008 as compared to $1.8 million during the fiscal year ended March 31, 2007.

Contractual obligations

We have no long-term debt and have various contractual obligations and commercial commitments. The following table sets forth our future contractual obligations and commercial commitments as of March 31, 2009.

	Payments Due by Period
	Total		Less Than 1 Year		2-3 Years		4-5 Years		5+ Years
	(In thousands)
Operating lease obligations(1)	$	10,233	$	4,257	$	4,618	$	1,358	$	—
Defined benefit plans(2)		3,417		157		430		700		2,130
Capital Commitments(3)		9,137		5,248		3,889		—		—
Total	$	22,787	$	9,662	$	8,937	$	2,058	$	2,130

(1)

Our obligations under our operating leases consist of future payments related to our real estate leases.

(2)

We accrue and contribute to benefit funds covering our employees in India and Sri Lanka. The amounts in the table represent the expected benefits to be paid out over the next ten years. We are not able to quantify expected benefit payments beyond ten years with any certainty.

(3)

Relates to construction of our campus in Hyderabad, India, net of advances.

Off-balance sheet arrangements

We do not have any investments in special purpose entities or undisclosed borrowings or debt.

We have entered into foreign currency derivative contracts with the objective of limiting our exposure to changes in the Indian rupee as described below in "Qualitative and Quantitative Disclosures about Market Risk."

During our fiscal year ended March 31, 2008, we adopted a foreign currency cash flow hedging program designed to further mitigate the risks of volatility in the Indian rupee against the U.S. dollar and U.K. pound sterling as described below in "Qualitative and Quantitative Disclosures about Market Risk." The program was expanded in the fiscal year ended March 31, 2009 and contemplates a partially hedged

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position of the Indian rupee for a rolling eight quarter period. From time to time, we may also purchase multiple foreign currency forward contracts designed to hedge fluctuation in foreign currencies, such as the U.K. pound sterling, against the U.S. dollar, or the U.K. pound sterling against the Sri Lankan rupee, and multiple foreign currency hedges designed to hedge foreign currency transaction gains and losses on our intercompany balances. Other than these foreign currency derivative contracts, we have not entered into off-balance sheet transactions, arrangements or other relationships with unconsolidated entities or other persons that are likely to affect liquidity or the availability of or requirements for capital resources.

Recent accounting pronouncements

Effective April 1, 2008, we adopted SFAS No. 157, Fair Value Measurement ("SFAS No. 157"), see note 5 to our consolidated financial statements. The Financial Accounting Standards Board ("FASB") issued FASB Staff Position ("FSP") No. 157-2, Effective Date of FASB Statement No. 157, on February 12, 2008, which provides a one year deferral of the effective date of SFAS No. 157 for non-financial assets and non-financial liabilities, except those that are recognized or disclosed in the financial statements at fair value at least annually. This Standard will become effective on April 1, 2009 for us. We are currently evaluating the impact, if any, this FSP will have on our financial statements.

On March 19, 2008, SFAS No. 161, Disclosures About Derivative Instruments and Hedging Activities ("SFAS No. 161"), was issued. SFAS No. 161 enhances the disclosure requirements for derivative instruments and hedging activities. This Standard will become effective on April 1, 2009 for us. This Statement will not impact our consolidated financial results, but will require certain additional disclosures.

On May 5, 2008, SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles ("SFAS No. 162"), was issued. SFAS No. 162 identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements that are presented in conformity with generally accepted accounting principles. This Standard will become effective on April 1, 2009 for us. We are currently evaluating the impact, if any, SFAS No. 162 will have on our financial statements.

In December 2008, the FASB issued FSP SFAS No. 132(R)-1, Employers' Disclosures about Postretirement Benefit Plan Assets. This FSP amends SFAS No. 132(R), Employers' Disclosures about Pensions and Other Postretirement Benefits to require more detailed disclosures about the fair value measurements of employers' plan assets including (a) investment policies and strategies; (b) major categories of plan assets; (c) information about valuation techniques and inputs to those techniques, including the fair value hierarchy classifications (as defined by SFAS No. 157) of the major categories of plan assets; (d) the effects of fair value measurements using significant unobservable inputs (Level 3) on changes in plan assets; and (e) significant concentrations of risk within plan assets. The disclosures required by the FSP will be included in our fiscal year ending March 31, 2010 consolidated financial statements. This Statement will not impact our consolidated financial results, but will require certain additional disclosures.

In April 2009, the FASB issued FSP SFAS No. 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. Based on the guidance, if an entity determines that the level of activity for an asset or liability has significantly decreased and that a transaction is not orderly, further analysis of transactions or quoted prices is needed, and a significant adjustment to the transaction or quoted prices may be necessary to estimate fair value in accordance with SFAS No. 157. This FSP is to be applied prospectively and is effective for interim and annual periods ending after June 15, 2009 with early adoption permitted for periods ended after March 15, 2009. We will adopt this FSP for our quarter ending June 30, 2009, and we expect that such adoption will have no impact on our consolidated financial statements.

In April 2009, the FASB issued FSP SFAS No. 115-2 and SFAS No. 124-2, Recognition and Presentation of Other-Than-Temporary Impairments. The guidance applies to investments in debt securities for which other-than-temporary impairments may be recorded. If an entity's management asserts that it does not

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have the intent to sell a debt security and it is more likely than not that it will not have to sell the security before recovery of its cost basis, then an entity may separate other-than-temporary impairments into two components: 1) the amount related to credit losses (recorded in earnings), and 2) all other amounts (recorded in other comprehensive income). This FSP is to be applied prospectively and is effective for interim and annual periods ending after June 15, 2009 with early adoption permitted for periods ended after March 15, 2009. We will adopt this FSP for our quarter ending June 30, 2009, and we expect that such adoption will have no impact on our consolidated financial statements.

In April 2009, the FASB issued FSP SFAS 107-1 and Accounting Principles Board ("APB") 28-1, Interim Disclosures about Fair Value of Financial Instruments. The FSP amends SFAS No. 107, Disclosures about Fair Value of Financial Instruments to require an entity to provide disclosures about fair value of financial instruments in interim financial information. This FSP is to be applied prospectively and is effective for interim and annual periods ending after June 15, 2009 with early adoption permitted for periods ended after March 15, 2009. We will include the required disclosures in our quarter ending June 30, 2009.

Item 7A.    Quantitative and qualitative disclosures about market risk.

Foreign currency exchange rate risk

We are exposed to foreign currency exchange rate risk in the ordinary course of business. We have historically entered into, and in the future we may enter into, foreign currency derivative contracts to minimize the impact of foreign currency fluctuations on both foreign currency denominated assets and forecasted expenses. The purpose of this foreign exchange policy is to protect us from the risk that the recognition of and eventual cash flows related to Indian rupee denominated expenses might be affected by changes in exchange rates. Certain of these contracts meet the criteria for hedge accounting as cash flow hedges under SFAS 133, Accounting for Derivative Instruments and Hedging Activities.

We evaluate our foreign exchange policy on an ongoing basis to assess our ability to address foreign exchange exposures on our balance sheet, income statement and operating cash flows from all foreign currencies, including most significantly the U.K. pound sterling, Indian rupee, and the Sri Lankan rupee.

During the fiscal year ended March 31, 2008, we adopted a foreign currency hedging program to mitigate the risks of volatility in the Indian rupee against the U.S. dollar and U.K. pound sterling. The U.S. dollar equivalent market value of the outstanding foreign currency derivative contracts as of March 31, 2009 was $57.6 million.

Recently, the U.S. dollar has strengthened materially against the U.K. pound sterling which has had, and may continue to have, a negative impact on our revenue generated in U.K. pound sterling. In response to this volatility, we have entered into new hedging transactions designed to hedge our forecasted sales and expenses denominated in the U.K. pound sterling. The derivative contracts are less than 90 days in duration and do not meet the criteria for hedge accounting. Such hedges may not be effective in mitigating this currency volatility.

During the fiscal year ended March 31, 2009, we made a one-time reclassification of certain intercompany payables of $10.3 million from short-term to long-term to further capitalize our U.K. subsidiary. From time to time, we may also purchase multiple foreign currency forward contracts designed to hedge fluctuation in foreign currencies, such as the U.K. pound sterling, against the U.S. dollar, and multiple foreign currency hedges designed to hedge foreign currency transactions and gains and losses on our intercompany balances.

Assuming the amount of expenditures by our Indian operations were consistent with fiscal 2009 and the timing of the funding of these operations were to remain consistent during our fiscal year ending March 31, 2010, a constant increase or decrease in the exchange rate between the Indian rupee and the U.S. dollar during fiscal 2010 of 10% would impact our net income by $5.2 million excluding the effect of foreign currency derivative contracts which would offset approximately 85% of the impact.

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Interest rate risk

We had no debt outstanding as of March 31, 2009. We do not believe we are exposed to material direct risks associated with changes in interest rates other than with our cash and cash equivalents, short-term investments and long-term investments. As of March 31, 2009, we had $107.1 million in cash and cash equivalents, short-term investments and long-term investments, the interest income from which is affected by changes in interest rates. Our invested securities primarily consist of government sponsored entity bonds, money market mutual funds, commercial paper, corporate debts and auction-rate securities. Our investments in debt securities are classified as either "available-for-sale" or "trading" and are recorded at fair value. Our "available-for-sale" and "trading" investments are sensitive to changes in interest rates. Interest rate changes would result in a change in the net fair value of these financial instruments due to the difference between the market interest rate and the market interest rate at the date of purchase of the financial instrument. A 100 basis point decrease in market interest rates at March 31, 2009 would impact the net fair value of such interest-sensitive financial instruments by $0.4 million.

Concentration of credit risk

Financial instruments which potentially expose us to concentrations of credit risk primarily consist of cash and cash equivalents, short-term investments and long-term investments, accounts receivable, derivative contracts, other financial assets and unbilled accounts receivable. We place our operating cash, investments and derivatives in highly-rated financial institutions. We adhere to a formal investment policy with the primary objective of preservation of principal, which contains credit rating minimums and diversification requirements. We believe that our credit policies reflect normal industry terms and business risk. We do not anticipate non-performance by the counterparties and, accordingly, do not require collateral. Credit losses and write-offs of accounts receivable balances have historically not been material to our financial statements and have not exceeded our expectations.

As widely reported, financial markets in the United States, Europe and Asia have been experiencing extreme disruption in recent periods, including, among other things, extreme volatility in security prices, severely diminished liquidity and credit availability, rating downgrades of certain investments and declining valuations of others. While we do not currently require access to credit markets to finance our operations, these economic developments affect our clients in a number of ways. The current tightening of credit in financial markets adversely affects the ability of our clients to obtain financing for their operations and could result in decreased global IT spending which, in turn, could result in delays, reductions in, or cancellation of engagements for our services. Regional and global economic weakness and uncertainty have also resulted in some companies reassessing their spending for technology and IT related projects and services. We are unable to predict the likely duration and severity of the current disruption in financial markets and adverse economic conditions in the United States and other countries. Our revenue and profitability depend on the overall demand for IT services from our clients, including discretionary IT spending. As a result of the worldwide economic slowdown, it is extremely difficult for us to forecast future revenue growth based on historical information and trends. Portions of our expenses are fixed and other expenses are tied to expected levels of utilization. To the extent that we do not achieve anticipated level of revenue growth, our gross profit and net income could be adversely affected until such expenses are reduced to an appropriate level.

In November 2008, we entered into an agreement with UBS, the investment firm that had sold us auction-rate securities at a par value of $6,675. Under the agreement, we (1) received the right (the "Put Option") to sell these auction-rate securities back to UBS at par, at our sole discretion, any time during the period from June 30, 2010 through July 2, 2012, and (2) gave UBS the right to purchase these auction-rate securities or sell these securities on our behalf at par any time after the execution of the agreement through July 2, 2012. We elected to measure the Put Option under the fair value option of SFAS No. 159, and recorded income of $1.2 million, and recorded a corresponding long term asset. As a result of entering into an agreement with UBS, we recognized an other-than-temporary impairment loss of $1.2 million on

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the related auction-rate security investments. Simultaneously, we transferred these auction-rate securities from available-for-sale to trading investment securities. The recording of the Put Option and the recognition of the other-than-temporary impairment loss did not impact the consolidated statement of operations for the fiscal year ended March 31, 2009. The value of the Put Option at March 31, 2009 was $0.6 million. We anticipate that any future changes in the fair value of the Put Option will be offset by the changes in the fair value of the related auction-rate securities with no material net impact to the consolidated statement of operations.

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Item 8.    Financial Statements and Supplementary Data.

Virtusa Corporation and Subsidiaries

Index to Consolidated Financial Statements

		Page
Reports of Independent Registered Public Accounting Firm		62
Consolidated Financial Statements:
	Consolidated Balance Sheets as of March 31, 2009 and 2008	64
	Consolidated Statements of Income for the Years Ended March 31, 2009, 2008 and 2007	65
	Consolidated Statements of Changes in Stockholders' Equity (Deficit) and Comprehensive Income (Loss) for the Years Ended March 31, 2009, 2008 and 2007	66
	Consolidated Statements of Cash Flows for the Years Ended March 31, 2009, 2008 and 2007	67
Notes to Consolidated Financial Statements		68

61

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
Virtusa Corporation and Subsidiaries:

We have audited the accompanying consolidated balance sheets of Virtusa Corporation and Subsidiaries (the Company) as of March 31, 2009 and 2008, and the related consolidated statements of income, changes in stockholders' equity (deficit) and comprehensive income (loss) and cash flows for each of the years in the three-year period ended March 31, 2009. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Virtusa Corporation and Subsidiaries as of March 31, 2009 and 2008, and the results of their operations and their cash flows for each of the years in the three-year period ended March 31, 2009, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of March 31, 2009, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated May 28, 2009 expressed an unqualified opinion on the effectiveness of the Company's internal control over financial reporting.

/s/ KPMG LLP

Boston, Massachusetts
May 28, 2009

62

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
Virtusa Corporation and Subsidiaries:

We have audited Virtusa Corporation and Subsidiaries' (the Company) internal control over financial reporting as of March 31, 2009, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 31, 2009, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of the Company as of March 31, 2009 and 2008, and the related consolidated statements of operations, changes in stockholders' equity (deficit) and comprehensive income (loss) and cash flows for each of the years in the three-year period ended March 31, 2009, and our report dated May 28, 2009 expressed an unqualified opinion on those consolidated financial statements.

/s/ KPMG LLP

Boston, Massachusetts
May 28, 2009

63

Virtusa Corporation and Subsidiaries

Consolidated Balance Sheets

			March 31, 2009			March 31, 2008
			(In thousands, except share and per share amounts)
ASSETS
Current assets:
	Cash and cash equivalents		$	55,698		$	41,047
	Short-term investments			23,333			40,816
	Accounts receivable, net of allowance of $1,041 and $653 at March 31, 2009 and 2008, respectively			28,244			34,716
	Unbilled accounts receivable			4,005			4,233
	Prepaid expenses			5,050			4,025
	Deferred income taxes			4,139			901
	Other current assets			5,668			6,349
		Total current assets		126,137			132,087
Property and equipment, net				19,680			16,833
Long-term investments				28,054			17,091
Restricted cash				3,489			4,361
Deferred income taxes				5,040			4,429
Other long-term assets				4,623			5,969
		Total assets	$	187,023		$	180,770
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Accounts payable		$	5,499		$	3,726
	Accrued employee compensation and benefits			9,520			10,424
	Accrued expenses—other			7,347			6,877
	Foreign currency derivative contracts, current portion			7,781			1,498
	Deferred revenue			1,016			351
	Income taxes payable			151			403
		Total current liabilities		31,314			23,279
	Long-term liabilities			3,123			1,657
		Total liabilities		34,437			24,936
Stockholders' equity:
	Undesignated preferred stock, $0.01 par value; Authorized 5,000,000 at March 31, 2009 and 2008, issued zero shares at March 31, 2009 and 2008			—			—
	Common stock, $0.01 par value; Authorized 120,000,000 and 80,000,000 shares at March 31, 2009 and 2008, respectively; issued 24,417,272 and 23,427,976 shares at March 31, 2009 and 2008, respectively; outstanding 22,657,884 and 23,008,411 shares at March 31, 2009 and 2008, respectively			244			234
	Treasury stock, 1,759,388 and 419,565 common shares, at cost, at March 31, 2009 and 2008, respectively			(8,244	)		(442	)
	Additional paid-in capital			144,286			137,774
	Accumulated earnings			30,485			18,428
	Accumulated other comprehensive loss			(14,185	)		(160	)
		Total stockholders' equity		152,586			155,834
		Total liabilities, redeemable convertible preferred stock and stockholders' equity	$	187,023		$	180,770

See accompanying notes to consolidated financial statements

64

Virtusa Corporation and Subsidiaries

Consolidated Statements of Income

			Year Ended March 31,
			2009			2008			2007
			(In thousands, except per share amounts)
Revenue			$	172,942		$	165,198		$	124,660
Costs of revenue				105,100			92,847			68,031
		Gross profit		67,842			72,351			56,629
Operating expenses:
	Selling, general and administrative expenses			57,864			52,972			42,478
		Income from operations		9,978			19,379			14,151
Other income (expense):
	Interest income, net			2,643			3,917			1,246
	Foreign currency transaction gains (losses)			293			(732	)		125
	Other, net			(48	)		64			(162	)
		Total other income		2,888			3,249			1,209
	Income before income tax expense (benefit)			12,866			22,628			15,360
Income tax expense (benefit)				809			4,857			(3,630	)
		Net income	$	12,057		$	17,771		$	18,990
Net income per share of common stock
	Basic		$	0.53		$	0.83		$	1.09
	Diluted		$	0.50		$	0.76		$	1.03

See accompanying notes to consolidated financial statements

65

Virtusa Corporation and Subsidiaries

Consolidated Statements of Changes in Stockholders' Equity (Deficit) and
Comprehensive Income (Loss)

	Common Stock				Treasury Stock						Additional Paid-in			Notes Receivable from Employee			Accumulated Earnings			Accumulated Other Comprehensive			Total Stockholder's Equity			Total Comprehensive Income
	Shares		Amount		Shares			Amount			Capital			Stockholders			(Deficit)			Loss			(Deficit)			(Loss)
	(In thousands, except share amounts)
Balance at March 31, 2006		6,331,064	$	63		(419,565	)	$	(442	)	$	5,605		$	(51	)	$	(18,238	)	$	(547	)	$	(13,610	)	$	1,885
Accrued interest on notes receivable from employees		—		—		—			—			—			(2	)		—			—			(2	)
Repayment of principal and accrued interest on notes		—		—		—			—			—			53			—			—			53
Accretion of preferred stock issuance cost		—		—		—			—			(48	)		—			—			—			(48	)
Proceeds from sale of common stock		1,006,669		10		—			—			11,410			—			—			—			11,420
Proceeds from the exercise of stock options		82,913		1		—			—			128			—			—			—			129
Share-based compensation		—		—		—			—			1,962			—			—			—			1,962
Adjustment to initially apply SFAS No. 158		—		—		—			—			—			—			—			(136	)		(136	)
Cumulative translation adjustment, net of taxes		—		—		—			—			—			—			—			353			353			353
Reclassification of warrants from equity to liabilities pursuant to adoption of FSP 150-5		—		—		—			—			(151	)		—			—			—			(151	)
Reclassification of warrants from liabilities to equity pursuant to warrant amendment		—		—		—			—			299			—			—			—			299
Net income		—		—		—			—			—			—			18,990			—			18,990			18,990
Balance at March 31, 2007		7,420,646	$	74		(419,565	)	$	(442	)	$	19,205		$	—		$	752		$	(330	)	$	19,259		$	19,343
Proceeds from the exercise of stock options		181,544		2		—			—			440			—			—			—			442
Reclass of SARs from liability to equity		—		—		—			—			1,382			—			—			—			1,382
Deferred offering costs		—		—		—			—			(8,811	)		—			—			—			(8,811	)
Proceeds from initial public offering		4,400,000		44		—			—			61,556			—			—			—			61,600
Conversion of preferred stock to common stock		11,425,786		114		—			—			60,748			—			—			—			60,862
Share based compensation		—		—		—			—			2,817			—			—			—			2,817
Unrealized gain (loss) on available-for-sale securities, net of taxes of $107		—		—		—			—			—			—			—			(196	)		(196	)		(196	)
Unrealized gain (loss) on effective cash flow hedges, net of taxes of $567		—		—		—			—			—			—			—			(931	)		(931	)		(931	)
Pension benefit adjustment		—		—		—			—			—			—			—			(167	)		(167	)		(167	)
Adoption of FIN 48		—		—		—			—			—			—			(95	)		—			(95	)
Tax benefit related to stock plans		—		—		—			—			437			—			—			—			437
Cumulative translation adjustment, net of taxes		—		—		—			—			—			—			—			1,464			1,464			1,464
Net income		—		—		—			—			—			—			17,771			—			17,771			17,771
Balance at March 31, 2008		23,427,976	$	234		(419,565	)	$	(442	)	$	137,774		$	—		$	18,428		$	(160	)	$	155,834		$	17,941
Proceeds from the exercise of stock options		977,287		10		—			—			2,217			—			—			—			2,227
Exercise of warrants		12,009		—		—			—			204			—			—			—			204
Restricted stock awards withheld for tax		—		—		—			—			(214	)		—			—			—			(214	)
Repurchase of common stock		—		—		(1,339,823	)		(7,802	)		—			—			—			—			(7,802	)
Share based compensation		—		—		—			—			3,772			—			—			—			3,772
Unrealized gain (loss) on available-for-sale securities, net of taxes of $(92)		—		—		—			—			—			—			—			142			142			142
Unrealized gain (loss) on effective cash flow hedges, net of taxes of $2,808		—		—		—			—			—			—			—			(4,322	)		(4,322	)		(4,322	)
Pension benefit adjustment		—		—		—			—			—			—			—			101			101			101
Reimbursement of fringe benefit tax on stock awards		—		—		—			—			142			—			—			—			142
Tax benefit related to stock plans		—		—		—			—			391			—			—			—			391
Cumulative translation adjustment, net of taxes of $628		—		—		—			—			—			—			—			(9,946	)		(9,946	)		(9,946	)
Net income		—		—		—			—			—			—			12,057			—			12,057			12,057
Balance at March 31, 2009		24,417,272	$	244		(1,759,388	)	$	(8,244	)	$	144,286		$	—		$	30,485		$	(14,185	)	$	152,586		$	(1,968	)

See accompanying notes to consolidated financial statements

66

Virtusa Corporation and Subsidiaries

Consolidated Statements of Cash Flows

				Year Ended March 31,
				2009			2008			2007
				(In thousands)
Cash provided by operating activities:
	Net income			$	12,057		$	17,771		$	18,990
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation and amortization			4,406			3,923			3,272
		Share-based compensation expense			3,772			3,041			2,911
		Loss (gain) on disposal of property and equipment and investments			(18	)		(144	)		7
		Mark to market for liability classified warrants			—			—			148
		Deferred income taxes, net			(842	)		402			(5,040	)
		Net changes in operating assets and liabilities:
			Accounts receivable, net		(730	)		(6,834	)		(12,887	)
			Prepaid expenses and other current assets		(2,468	)		(4,960	)		(1,625	)
			Other long-term assets		491			(3,875	)		(10	)
			Accounts payable		7,671			(1,011	)		1,836
			Accrued employee compensation and benefits		685			3,052			1,981
			Accrued expenses—other		7,406			3,530			941
			Foreign currency derivative contracts, net		(7,218	)		(1,498	)		—
			Deferred revenue		715			(540	)		9
			Income taxes payable		352			416			644
			Excess tax benefits from stock option exercises		(391	)		(437	)		(36	)
			Other long-term liabilities		(277	)		604			(21	)
			Net cash provided by operating activities		25,611			13,440			11,120
Cash flows used for investing activities:
	Proceeds from sale of equity investment				—			—			466
	Proceeds from sale of property and equipment				12			172			35
	Purchase of short-term investments				(16,068	)		(79,773	)		—
	Proceeds from sale or maturity of short-term investments				52,880			40,943			—
	Purchase of long-term investments				(37,925	)		(23,929	)		—
	Proceeds from sale or maturity of long-term investments				7,236			4,656			—
	Decrease (increase) in restricted cash				586			(2,690	)		(872	)
	Purchase of property and equipment				(10,191	)		(12,526	)		(5,993	)
			Net cash used for investing activities		(3,470	)		(73,147	)		(6,364	)
Cash flows provided by (used for) financing activities:
	Proceeds from exercise of common stock options				2,227			442			129
	Purchase of treasury stock				(7,802	)		—			—
	Proceeds from sale of common stock				—			61,600			11,420
	Principal payments on capital lease obligation				(6	)		(7	)		(22	)
	Repayments of notes receivable				—			—			53
	Deferred stock offering costs				—			(7,038	)		(1,773	)
	Excess tax benefits from stock option exercises				391			437			36
			Net cash provided by (used for) financing activities		(5,190	)		55,434			9,843
Effect of exchange rate changes on cash and cash equivalents					(2,300	)		241			243
			Net increase (decrease) in cash and cash equivalents		14,651			(4,032	)		14,842
Cash and cash equivalents, beginning of year					41,047			45,079			30,237
Cash and cash equivalents, end of year				$	55,698		$	41,047		$	45,079
Supplemental disclosure of cash flow information:
	Cash paid for interest			$	18		$	3		$	13
	Cash receipts from interest			$	3,342		$	3,275		$	1,233
	Cash paid for income tax			$	879		$	4,219		$	722

See accompanying notes to consolidated financial statements

67

Virtusa Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(thousands, except share and per share amounts)

(1) Nature of the Business

Virtusa Corporation (the Company or Virtusa) is a global information technology services company. The Company uses an offshore delivery model to provide a broad range of information technology, or IT services, including IT consulting, technology implementation and application outsourcing. Using its enhanced global delivery model, innovative platforming approach and industry expertise, the Company provides cost-effective services that enable its clients to accelerate time to market, improve service and enhance productivity. Headquartered in Massachusetts, Virtusa has offices in the United States and the United Kingdom, and global delivery centers in Hyderabad and Chennai, India and Colombo, Sri Lanka.

The Company completed an initial public offering, or IPO, of its common stock on August 8, 2007. In connection with the Company's IPO, the Company issued and sold 4,400,000 shares of common stock at a public offering price of $14.00 per share. The Company received net proceeds of $52,789 after deducting underwriting discounts and commissions of $4,312 and offering costs of $4,499. Upon the closing of the IPO, all outstanding shares of redeemable convertible preferred stock automatically converted into 11,425,786 shares of the Company's common stock.

On July 18, 2007 the Company effected a one-for-3.13 reverse stock split of its common stock. All impacted amounts included in the consolidated financial statements and notes thereto have been retroactively adjusted for the reverse stock split. Impacted amounts include shares of common stock outstanding, share issuances, shares underlying stock options, stock appreciation rights and warrants, shares reserved and net income per share.

(2) Summary of Significant Accounting Policies

(a) Principles of Consolidation

The consolidated financial statements reflect the accounts of the Company and its direct and indirect subsidiaries, Virtusa (India) Private Limited, Virtusa Consulting Services, Private Limited and Virtusa Software Services, Private Limited, each organized and located in India, Virtusa (Private) Limited, organized and located in Sri Lanka, Virtusa UK Limited, organized and located in the United Kingdom, Virtusa Securities Corporation, a Massachusetts securities corporation located in the United States, and Virtusa International, B.V., organized in the Netherlands. All intercompany transactions and balances have been eliminated in consolidation.

(b) Use of Estimates

The preparation of financial statements in accordance with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, including the recoverability of tangible assets, disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenue and expenses during the reported period. Management reevaluates these estimates on an ongoing basis. The most significant estimates relate to the recognition of revenue and profits based on the percentage of completion method of accounting for fixed-price contracts, share-based compensation, income taxes, including reserves for uncertain tax provisions, deferred tax assets and liabilities, and the valuation of financial instruments including derivative contracts and investments. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable

68

Virtusa Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(thousands, except share and per share amounts)

(2) Summary of Significant Accounting Policies (Continued)

under the circumstances. The actual amounts may vary from the estimates used in the preparation of the accompanying consolidated financial statements.

(c) Foreign Currency Translation

The functional currencies of the Company's non-U.S. subsidiaries are the local currency of the country in which they operate. India, Sri Lanka, Netherlands and the United Kingdom's operating and capital expenditures are denominated in their local currency which is the currency most compatible with their expected economic results. India and Sri Lanka local expenditures form the underlying basis for intercompany transactions which are subsequently conducted in both U.S. dollars and U.K. pounds sterling. U.K. client sales contracts are conducted in U.K. pounds sterling.

All transactions and account balances are recorded in the local currency. The Company translates the value of these non-U.S. subsidiaries' local currency denominated assets and liabilities into U.S. dollars at the rates in effect at the balance sheet date. Resulting translation adjustments are recorded in stockholders' equity as a component of accumulated other comprehensive income (loss). The local currency denominated statement of income amounts are translated into U.S. dollars using the average exchange rates in effect during the period. Realized foreign currency transaction gains and losses are included in the consolidated statements of income. The Company's non-U.S. subsidiaries do not operate in "highly inflationary" countries. During the quarter ended March 31, 2009, the Company corrected immaterial errors of $277, and $600, that originated in prior quarters of the current fiscal year with respect to the translation of share-based compensation expense recorded in foreign subsidiaries and the tax benefit associated with the intercompany foreign currency loss recorded on the Company's U.K. subsidiary, respectively. These adjustments impacted current taxes payable, currency translation adjustment, and additional-paid-in-capital, and had no impact on current earnings for the fiscal year ended March 31, 2009

(d) Derivative Instruments and Hedging Activities

The Company enters into forward foreign exchange contracts to mitigate the risk of changes in foreign exchange rates on intercompany transactions and forecasted transactions denominated in foreign currencies. The Company designates derivative contracts as cash flow hedges if it satisfies the criteria for hedge accounting under Statement of Financial Accounting Standard ("SFAS") No. 133, Accounting for Derivative Instruments and Hedging Activities. Changes in fair values of derivatives designated as cash flow hedges are deferred and recorded as a component of accumulated other comprehensive income until the hedged transactions occur and are then recognized in the consolidated statements of income. Changes in fair value of derivatives not designated as hedging instruments and the ineffective portion of derivatives designated as cash flow hedges are recognized immediately in the consolidated statement of income.

With respect to derivatives designated as cash flow hedges, the Company formally documents all relationships between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedge transactions. The Company also formally assesses both at the inception of the hedge and on an ongoing basis, whether each derivative is highly effective in offsetting changes in fair values or cash flows of the hedged item. If the Company determines that a derivative or a portion thereof is not highly effective as a hedge, or if a derivative ceases to qualify for hedge accounting, the Company will prospectively discontinue hedge accounting with respect to that derivative.

69

Virtusa Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(thousands, except share and per share amounts)

(2) Summary of Significant Accounting Policies (Continued)

(e) Cash and Cash Equivalents and Restricted Cash

The Company considers all highly liquid investments with a remaining maturity of three months or less from the date of purchase to be cash equivalents. At March 31, 2009, cash equivalents consisted of money market instruments, U.S. Treasury bills and certificates of deposit.

The Company had restricted cash in India totaling $989 and $1,242 at March 31, 2009 and 2008, respectively, which includes restricted deposits with banks to secure the import of computer and other equipment of $164 and $242 at March 31, 2009 and 2008, respectively, deposits under lien of $186 and $299 respectively, against bank guarantees issued by a bank in favor of government agencies associated with the construction of the Company's campus facility in India, and deposits under lien of $639 and $701 respectively against a bank guarantee related to a tax appeal with the government of India at March 31, 2009 and 2008. Additionally at March 31, 2009 and 2008, respectively, the Company had restricted cash related to its hedging program of $2,500.

(f) Investment Securities

The Company classifies all debt securities as "available for sale" or "trading" in accordance with SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities. These securities are classified as short-term investments and long-term investments on the consolidated balance sheet and are carried at fair market value. Any unrealized gains and losses on available for sale securities are reported as other comprehensive income (loss), net of tax, as a separate component of stockholders' equity unless the decline in value is deemed to be other-than-temporary, in which case, investments are written down to fair value and the loss is charged to the consolidated statement of income. Any realized gains and losses on trading securities are charged to the consolidated statement of income. Short-term investments are those with original maturities of more than three months and less than one year at the date of purchase and less than one year from the date of the balance sheet. Long-term investments are those with maturities of more than one year from the date of the balance sheet.

(g) Fair Value of Financial Instruments

At March 31, 2009 and 2008, the carrying amounts of the Company's financial instruments, which included cash and cash equivalents, accounts receivable, unbilled accounts receivable, restricted cash, accounts payable, accrued employee compensation and benefits and other accrued expenses, approximate their fair values due to the nature of the items.

(h) Concentration of Credit Risk and Significant Customers

Financial instruments which potentially expose the Company to concentrations of credit risk are primarily comprised of cash and cash equivalents, investments, derivatives, accounts receivable and unbilled accounts receivable. The Company places its cash, investments and derivatives in highly-rated financial institutions. The Company adheres to a formal investment policy with the primary objective of preservation of principal, which contains credit rating minimums and diversification requirements. Management believes its credit policies reflect normal industry terms and business risk. The Company does not anticipate non-performance by the counterparties and, accordingly, does not require collateral.

70

Virtusa Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(thousands, except share and per share amounts)

(2) Summary of Significant Accounting Policies (Continued)

At March 31, 2009, four clients accounted for 17%, 14%, 12% and 11%, respectively, of gross accounts receivable. At March 31, 2008, one client accounted for 36% of gross accounts receivable. During the fiscal year ended March 31, 2009, sales to three clients accounted for 19%, 13% and 10% of the Company's revenue, respectively. During the fiscal year ended March 31, 2008, one client accounted for 27% of the Company's revenue.

(i) Property and Equipment

Property and equipment are recorded at cost and depreciated over their estimated useful lives using the straight-line method. Leasehold improvements are amortized over the shorter of their lease term or the estimated useful life of the related asset. Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is credited or charged to income. Repair and maintenance costs are expensed as incurred.

(j) Long-lived Assets

The Company's long-lived assets include property and equipment. The Company evaluates the recoverability of its long-lived assets whenever events or changes in circumstances indicate that the carrying amounts of the long-lived assets may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amounts of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying value of the assets exceed the fair value of the assets and the resulting losses are included in the statement of income.

(k) Internally-Developed Software

Statement of Position ("SOP") 98-1, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use, requires certain research and development costs associated with the application development stage to be capitalized for internal use software. At March 31, 2009 and 2008, capitalized software development costs pursuant to SOP 98-1 were approximately $1,372 and $825, respectively. These costs were recorded in property and equipment. Capitalized internal use software development costs are amortized over their estimated useful life, generally three years, using the straight line method, beginning with the date that an asset is ready for its intended use. For the fiscal years ended March 31, 2009, 2008 and 2007, amortization of capitalized software development costs amounted to approximately $275, $326 and $230, respectively.

(l) Income Taxes

Income taxes are accounted for under the provisions of SFAS No. 109, Accounting for Income Taxes, using the asset and liability method whereby deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled.

71

Virtusa Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(thousands, except share and per share amounts)

(2) Summary of Significant Accounting Policies (Continued)

At December 31, 2006, the Company determined that it was more likely than not that its deferred tax assets would be realized based upon its positive cumulative operating results and its assessment of its expected future results. As a result, the Company released its valuation allowance and recognized a discrete income tax benefit of $5,040 in its consolidated statement of income for the fiscal year ended March 31, 2007. On an ongoing basis, the Company evaluates whether a valuation allowance is needed to reduce its deferred tax assets to the amount that is more likely than not to be realized based on the weight of all the negative and positive evidence.

Effective April 1, 2007, the Company adopted Financial Interpretation No. 48, Accounting for Uncertainty in Income Taxes—an interpretation of SFAS No. 109 ("FIN 48"). In addition, the calculation of the Company's tax liabilities involves dealing with uncertainties in the application of complex tax regulations in multiple jurisdictions. The Company records liabilities for estimated tax obligations in the United States and other tax jurisdictions (see note 11).

(m) Revenue Recognition

The Company derives its revenue from a variety of IT consulting, technology implementation and application outsourcing services. Contracts for these services have different terms and conditions based on the scope, deliverables, and complexity of the engagement which require management to make judgments and estimates in determining the overall cost to the customer. Fees for these contracts may be in the form of time-and-materials or fixed price arrangements and volume discounts are recorded as a reduction of revenue over the contractual period as services are performed.

Revenue on time-and-material contracts is recognized as the services are performed and amounts are earned in accordance with the Securities and Exchange Commission ("SEC") Staff Accounting Bulletin ("SAB") No. 101, Revenue Recognition in Financial Statements, as amended by SAB No. 104, Revenue Recognition. The Company considers amounts to be earned once evidence of an arrangement has been obtained, services are delivered, fees are fixed or determinable, and collectibility is reasonably assured. For contracts with fees based on time-and-materials, the Company recognizes revenue over the period of performance.

Revenue from fixed price contracts is accounted for under the percentage-of-completion method in accordance with the American Institute of Certified Public Accountants Statement of Position 81-1 ("SOP 81-1"), Accounting for Performance of Construction-Type and Certain Production-Type Contracts. Under the percentage-of-completion method, management estimates the percentage of completion based upon efforts incurred as a percentage of the total estimated efforts for the specified engagement. When total cost estimates exceed revenue, the Company accrues for the estimated losses immediately. The use of the percentage-of-completion method requires significant judgment relative to estimating total contract revenue and efforts, including assumptions relative to the length of time to complete the project, the nature and complexity of the work to be performed, and anticipated changes in other engagement-related costs. Estimates of total contract revenue and efforts are continuously monitored during the term of the contract and are subject to revision as the contract progresses. When revisions in estimated contract revenue and efforts are determined, such adjustments are recorded in the period in which they are first identified.

72

Virtusa Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(thousands, except share and per share amounts)

(2) Summary of Significant Accounting Policies (Continued)

Revenue includes reimbursements of travel and out-of-pocket expenses with equivalent amounts of expense recorded in costs of revenue of $3,485, $4,303 and $3,312 for the fiscal years ended March 31, 2009, 2008 and 2007, respectively.

(n) Costs of Revenue and Operating Expenses

Costs of revenue consist principally of salaries, employee benefits and stock compensation expense, reimbursable and non-reimbursable travel costs, subcontractor fees, and immigration related expenses for IT professionals. Selling and marketing expenses are charged to income as incurred. Selling and marketing expenses are those expenses associated with promoting and selling the Company's services and include such items as sales and marketing personnel salaries, stock compensation expense and related fringe benefits, commissions, travel, and the cost of advertising and other promotional activities. Advertising and promotional expenses incurred were approximately $166, $172 and $207 for the fiscal years ended March 31, 2009, 2008 and 2007, respectively.

General and administrative expenses include other operating items such as officers' and administrative personnel salaries, stock compensation expense and related fringe benefits, legal and audit expenses, public company related expenses, insurance, provision for doubtful accounts, depreciation and operating lease expenses.

(o) Share-Based Compensation

In accordance with the provisions of SFAS No. 123(R), Share Based Payment ("SFAS No. 123R"), the Company adopted the fair value recognition provisions using the modified prospective method. Accordingly, the statements of income for the fiscal years ended March 31, 2009, 2008 and 2007 include compensation costs related to newly granted share-based awards calculated in accordance with SFAS No. 123R, as well as for those issued in prior years calculated in accordance with SFAS No. 123 that vest after the adoption date. The compensation cost is determined by estimating the fair value at the grant date of the Company's common stock using the Black-Scholes option pricing model, and expensing the total compensation cost on a straight line basis (net of estimated forfeitures) over the requisite employee service period. Due to the fringe benefit tax in India, the Company estimated the fair value at grant date using the lattice model for stock options granted to employees based in India, during the fiscal years ended March 31, 2008 and 2009. The total SFAS 123R compensation expense for the fiscal years ended March 31, 2009, 2008 and 2007 was $3,772, $3,041 and $2,911, respectively, with $588, $661 and $1,216, respectively, of this amount included in the costs of revenue, and $3,184, $2,380 and $1,695, respectively, included in selling, general and administrative expenses.

The fair value of each stock option is estimated on the date of grant using the respective option pricing valuation model with the following assumptions:

	Year Ended March 31,
Weighted Average Fair Value Options Pricing Model Assumptions	2009			2008			2007
Risk-free interest rate		3.21	%		4.02	%		4.63	%
Expected term (in years)		6.09			6.25			6.25
Anticipated common stock volatility		41.37	%		43.8	%		50.06	%
Expected dividend yield		—			—			—

73

Virtusa Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(thousands, except share and per share amounts)

(2) Summary of Significant Accounting Policies (Continued)

The risk-free interest rate assumptions are based on the interpolation of various U.S. Treasury bill rates in effect during the month in which stock option awards are granted. The Company's volatility assumption is based on the historical volatility rates of the common stock of its publicly held peers over periods commensurate with the expected term of each grant.

The expected term of employee share-based awards represents the weighted average period of time that awards are expected to remain outstanding. The determination of the expected term of share-based awards assumes that employees' behavior is a function of the awards vested, contractual lives, and the extent to which the award is in the money. Accordingly, the Company has elected to use the SAB No. 107 Share-Based Payments (as amended by SAB 110) "simplified" method of determining the expected term or life of its share-based awards.

As of March 31, 2009, there was $4,606 of total unrecognized compensation cost related to nonvested stock options granted under the Company's Amended and Restated 2000 Option Plan and the Company's 2007 Stock Option and Incentive Plan (see note 10 for a more complete description of these plans). That cost is expected to be recognized over a remaining weighted average period of 2.43 years.

In addition to the stock options described above, the Company established the 2005 Stock Appreciation Rights Plan, a stock appreciation rights (SARs) compensation plan during the fiscal year ended March 31, 2006 (see note 10 for a more complete description of this plan). Prior to the Company's IPO, SARs were required to be settled in cash under the terms of the plan. Thus, the Company determined the compensation cost and the future liability for these SARs by establishing the fair value of the SARs at the date of grant and remeasuring the fair value of the vested SARs at the close of each reporting period. Subsequent to the Company's IPO, the Company is required, under the terms of the plan to settle, and has settled, all exercised SARs in shares of the Company's common stock. Therefore, the SARs are now equity classified and are no longer remeasured. The liability measured as of the IPO date was $1,382 and this amount was reclassified as a component of additional paid in capital during the fiscal year ended March 31, 2008. During the fiscal years ended March 31, 2009, 2008 and 2007, the Company recognized compensation expense in the amount of $149, $455 and $984, respectively, with $122, $391 and $883 of this amount included in costs of revenue, and $27, $64 and $101 in selling, general and administrative expenses.

(p) Allowance for Doubtful Accounts

The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of clients to make required payments. The allowance for doubtful accounts is determined by evaluating the relative credit worthiness of each client, historical collections experience and other information, including the aging of the receivables.

(q) Unbilled Accounts Receivable

Unbilled accounts receivable represent revenue on contracts to be billed, in subsequent periods, as per the terms of the related contracts.

(r) Recent Accounting Pronouncements

Effective April 1, 2008, the Company adopted SFAS No. 157, Fair Value Measurement ("SFAS No. 157"), see note 5. The Financial Accounting Standards Board ("FASB") issued FASB Staff Position ("FSP")

74

Virtusa Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(thousands, except share and per share amounts)

(2) Summary of Significant Accounting Policies (Continued)

No. 157-2, Effective Date of FASB Statement No. 157, on February 12, 2008, which provides a one year deferral of the effective date of SFAS No. 157 for non-financial assets and non-financial liabilities, except those that are recognized or disclosed in the financial statements at fair value at least annually. This Standard is effective April 1, 2009 for the Company. The Company is currently evaluating the impact, if any, this FSP will have on its financial statements.

On March 19, 2008, SFAS No. 161, Disclosures About Derivative Instruments and Hedging Activities ("SFAS No. 161"), was issued. SFAS No. 161 enhances the disclosure requirements for derivative instruments and hedging activities. This Standard is effective April 1, 2009 for the Company. The adoption of SFAS No. 161 will not affect the Company's consolidated financial results, but will require certain additional disclosures.

On May 5, 2008, SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles ("SFAS No. 162"), was issued. SFAS No. 162 identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements that are presented in conformity with generally accepted accounting principles.This Standard is effective April 1, 2009 for the Company. The Company is currently evaluating the impact, if any, SFAS No. 162 will have on its financial statements.

In December 2008, the FASB issued FSP SFAS No. 132(R)-1, Employers' Disclosures about Postretirement Benefit Plan Assets. This FSP amends SFAS No. 132(R), Employers' Disclosures about Pensions and Other Postretirement Benefits to require more detailed disclosures about the fair value measurements of employers' plan assets including (a) investment policies and strategies; (b) major categories of plan assets; (c) information about valuation techniques and inputs to those techniques, including the fair value hierarchy classifications (as defined by SFAS No. 157) of the major categories of plan assets; (d) the effects of fair value measurements using significant unobservable inputs (Level 3) on changes in plan assets; and (e) significant concentrations of risk within plan assets. The disclosures required by the FSP will be included in the Company's year ending March 31, 2010 consolidated financial statements. This statement does not impact the Company's consolidated financial results, but will require certain additional disclosures.

In April 2009, the FASB issued FSP SFAS No. 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. Based on the guidance, if an entity determines that the level of activity for an asset or liability has significantly decreased and that a transaction is not orderly, further analysis of transactions or quoted prices is needed, and a significant adjustment to the transaction or quoted prices may be necessary to estimate fair value in accordance with SFAS No. 157. This FSP is to be applied prospectively and is effective for interim and annual periods ending after June 15, 2009 with early adoption permitted for periods ended after March 15, 2009. The Company will adopt this FSP for its quarter ending June 30, 2009, and there is no expected impact on the Company's consolidated financial results.

In April 2009, the FASB issued FSP SFAS No. 115-2 and SFAS No. 124-2, Recognition and Presentation of Other-Than-Temporary Impairments. The guidance applies to investments in debt securities for which other-than-temporary impairments may be recorded. If an entity's management asserts that it does not have the intent to sell a debt security and it is more likely than not that it will not have to sell the security before recovery of its cost basis, then an entity may separate other-than-temporary impairments into two components: 1) the amount related to credit losses (recorded in earnings), and 2) all other amounts

75

Virtusa Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(thousands, except share and per share amounts)

(2) Summary of Significant Accounting Policies (Continued)

(recorded in other comprehensive income). This FSP is to be applied prospectively and is effective for interim and annual periods ending after June 15, 2009 with early adoption permitted for periods ended after March 15, 2009. The Company will adopt this FSP for its quarter ending June 30, 2009, and there is no expected impact on the Company's consolidated financial results.

In April 2009, the FASB issued FSP SFAS No. 107-1 and Accounting Principles Board ("APB") 28-1, Interim Disclosures about Fair Value of Financial Instruments. The FSP amends SFAS No. 107 Disclosures about Fair Value of Financial Instruments to require an entity to provide disclosures about fair value of financial instruments in interim financial information. This FSP is to be applied prospectively and is effective for interim and annual periods ending after June 15, 2009 with early adoption permitted for periods ended after March 15, 2009. The Company will include the required disclosures in its quarter ending June 30, 2009.

(s) Reclassifications

Certain prior-year amounts have been reclassified to conform to the fiscal year ended March 31, 2009 presentation.

(3) Net Income per Share

Prior to the Company's IPO, the Company calculated net income per share in accordance with SFAS No. 128, Earnings per Share, and EITF Issue No. 03-6, Participating Securities and the Two—Class Method under FASB Statement 128 (EITF No. 03-6). EITF No. 03-6 clarifies the use of the "two-class" method for the computation of earnings per share by companies with participating securities or multiple classes of common stock. The Company's series A, B, C and D redeemable convertible preferred stock were participating securities due to their participation rights related to cash dividends declared by the Company. When determining basic earnings per share under EITF No. 03-6, undistributed earnings for a period are allocated to a participating security based on the contractual participation rights of the security to share in those earnings as if all of the earnings for the period had been distributed. Net losses are not allocated to preferred stockholders.

Basic net income per share for the fiscal year ended March 31, 2007 has been calculated using the two class method. Basic net income per share is computed by dividing the net income available to common stockholders by the weighted average common shares outstanding. The net income available to common stockholders is calculated by deducting dividends allocable to the Company's redeemable convertible preferred stock from net income. There have been no dividends to common or redeemable convertible preferred stock for any of the periods presented. Diluted net income per share is computed giving effect to all potentially dilutive common stock, including options and all convertible securities to the extent they are dilutive.

Subsequent to the IPO, for the fiscal years ended March 31, 2009 and 2008, basic net income per share is computed by dividing net income by the weighted average number of shares of common stock outstanding for the period, and diluted earnings per share is computed by including common stock equivalents outstanding for the period in the denominator. Common stock equivalents include shares issuable upon the exercise of outstanding stock options, SARs and warrants, net of shares assumed to have been

76

Virtusa Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(thousands, except share and per share amounts)

(3) Net Income per Share (Continued)

purchased with the proceeds, using the treasury stock method. The following table sets forth the computation of basic and diluted net income per share for the periods set forth below:

	Fiscal Year Ended March 31,
	2009		2008		2007
Numerators:
Net income	$	12,057	$	17,771	$	18,990
Net income allocated to participating redeemable convertible preferred stockholders		—		—		12,447
Net income available to common stockholders	$	12,057	$	17,771	$	6,543
Denominators:
Weighted average common shares outstanding		22,763,759		21,368,470		6,005,619
Dilutive effect of employee stock options and warrants		1,275,473		1,828,021		919,756
Dilutive effect of stock appreciation rights		97,484		86,172		—
Dilutive effect of redeemable convertible preferred shares		—		—		11,425,786
Weighted average shares—Diluted		24,136,716		23,282,663		18,351,161
Net income per share—Basic	$	0.53	$	0.83	$	1.09
Net income per share—Diluted	$	0.50	$	0.76	$	1.03

During the fiscal years ended March 31, 2009, 2008, and 2007, options to purchase 1,177,861, 257,386 and 691,151 shares of common stock, respectively, were excluded from the calculations of diluted earnings per share as their effect would have been anti-dilutive.

(4) Investment Securities

At March 31, 2009, all of the Company's investment securities were classified as available-for-sale or trading and were carried on its balance sheet at their fair market value. A fair market value hierarchy based on three levels of inputs was used to measure each security (see note 5).

77

Virtusa Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(thousands, except share and per share amounts)

(4) Investment Securities (Continued)

The following is a summary of investment securities as of March 31, 2009:

			Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available-for-sale securities:
	Corporate bonds:
		Current	$	17,428	$	84	$	(70	)	$	17,442
		Non-current		5,032		13		(79	)		4,966
	Auction-rate securities:
		Non-current		1,000		—		(96	)		904
	Medium and short-term notes:
		Current		1,402		—		(2	)		1,400
		Non-current		1,006		2		—			1,008
	Euro dollar bonds:
		Current		1,501		—		(10	)		1,491
		Non-current		2,663		57		—			2,720
	Treasury coupons:
		Current		3,000		—		—			3,000
		Non-current		12,391		47		(15	)		12,423
	Total available-for-sale securities			45,423		203		(272	)		45,354
Trading securities:
	Auction-rate securities (non-current)			5,501		532		—			6,033
Total investments			$	50,924	$	735	$	(272	)	$	51,387

78

Virtusa Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(thousands, except share and per share amounts)

(4) Investment Securities (Continued)

The following is a summary of investment securities as of March 31, 2008:

			Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available-for-sale securities:
	Commercial paper:
		Current	$	14,969	$	2	$	(14	)	$	14,957
		Non-current		—		—		—			—
	Corporate bonds:
		Current		11,948		63		(8	)		12,003
		Non-current		4,673		25		(33	)		4,665
	Auction-rate securities:
		Current		—		—		—			—
		Non-current		8,350		—		(385	)		7,965
	Treasury coupons:
		Current		7,579		10		(9	)		7,580
		Non-current		1,000		2		—			1,002
	Medium and short-term notes:
		Current		4,159		11		(8	)		4,162
		Non-current		726		—		(1	)		725
	Euro dollar bonds:
		Current		1,300		12		—			1,312
		Non-current		1,506		20		—			1,526
	Municipal bonds:
		Current		—		—		—			—
		Non-current		1,200		8					1,208
	Certificates of deposit:
		Current		800		2					802
		Non-current		—		—		—			—
Total investments			$	58,210	$	155	$	(458	)	$	57,907

The Company evaluates investments with unrealized losses to determine if the losses are other than temporary. The Company has determined that the gross unrealized losses on its available-for-sale securities at March 31, 2009 are temporary. In making this determination, the Company considered the financial condition and near-term prospects of the issuers, the magnitude of the losses compared to the investments cost, the length of time the investments have been in an unrealized loss position and the Company's ability to hold the investments to maturity.

The following tables show the gross unrealized losses and fair value of the Company's investment securities with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by

79

Virtusa Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(thousands, except share and per share amounts)

(4) Investment Securities (Continued)

investment category and length of time that individual securities have been in a continuous unrealized loss position as of March 31, 2009 and March 31, 2008:

Less Than 12 Months

			Fair Value		Gross Unrealized Loss
Available-for-sale securities at March 31, 2009:
	Corporate bonds		$	5,253	$	(70	)
	Medium and short-term notes			700		(2	)
	Euro dollar bonds			1,491		(10	)
		Total	$	7,444	$	(82	)

Greater Than 12 Months

			Fair Value		Gross Unrealized Loss
Available-for-sale securities at March 31, 2009:
	Corporate bonds		$	3,287	$	(79	)
	Auction-rate securities			1,000		(96	)
	Treasury coupons			2,154		(15	)
		Total	$	6,441	$	(190	)

Less Than 12 Months

			Fair Value		Gross Unrealized Loss
Available-for-sale securities at March 31, 2008:
	Commercial paper		$	7,929	$	(14	)
	Corporate bonds			4,910		(41	)
	Auction rate securities			7,965		(385	)
	Treasury coupons			5,070		(9	)
	Medium and short-term notes			1,967		(9	)
		Total	$	27,841	$	(458	)

Available-for-sale and trading securities by contractual maturity were as follows:

		March 31, 2009
Due in one year or less		$	23,333
Due after 1 year through 5 years			21,117
Due after 5 years			6,937
	Total	$	51,387

80

Virtusa Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(thousands, except share and per share amounts)

(4) Investment Securities (Continued)

The Company previously invested in auction-rate securities whose underlying assets are generally student loans which are substantially backed by the U.S. federal government. In February 2008, auctions began to fail for these securities and each auction since then has failed. As of March 31, 2009, due to the auction failures, the Company reclassified its investment in auction-rate securities from short-term investments to long-term investments, reflecting the fact that the Company's auction-rate securities had underlying final maturities of greater than one year and the Company's intent and ability to hold the securities beyond one year. These investments were recorded at fair value at March 31, 2009 and 2008, respectively.

In November 2008, the Company entered into an agreement (the "Agreement") with UBS AG, the investment firm that had sold the Company auction-rate securities at a par value of $6,675. Under the Agreement, the Company (1) received the right (the "Put Option") to sell these auction-rate securities back to the investment firm at par, at the Company's sole discretion, any time during the period from June 30, 2010 through July 2, 2012, and (2) provided the investment firm the right to purchase these auction-rate securities or sell these securities on the Company's behalf at par any time after the execution of the Agreement through July 2, 2012. The Company elected to measure the Put Option under the fair value option of SFAS No. 159, and recorded income of $1,174, and recorded a corresponding long term asset. As a result of accepting the Agreement, the Company recognized an other-than-temporary impairment loss of $1,174 on the related auction-rate security investments. Simultaneously, the Company transferred these auction-rate securities from available-for-sale to trading investment securities. The recording of the Put Option and the recognition of the other-than-temporary impairment loss did not impact the consolidated statement of operations for the fiscal year ended March 31, 2009 as the impact was offsetting. The Company anticipates that any future changes in the fair value of the Put Option will be offset by the changes in the fair value of the related auction-rate securities with no material net impact to the consolidated statement of income.

During the fiscal years ended March 31, 2009 and 2008, the Company recorded net realized gains on investments of $18 and $64 on sales of marketable securities, respectively.

(5) Fair Value of Financial Instruments

Effective April 1, 2008, the Company adopted SFAS No. 157. In February 2008, the FASB issued FSP No. FAS 157-2, which provides a one year deferral of the effective date of SFAS No. 157 for non-financial assets and non-financial liabilities, except those that are recognized or disclosed in the financial statements at fair value at least annually. Therefore, the Company has adopted the provisions of SFAS No. 157 with respect to its financial assets and liabilities only and is evaluating the impact on all non-financial assets and liabilities. Other than disclosure, the adoption of SFAS No. 157 had no effect on the Company's operating results or financial position. SFAS No. 157 defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles and enhances disclosures about fair value measurements. Fair value is defined under SFAS No. 157 as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value under SFAS No. 157 must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair value hierarchy based on three

81

Virtusa Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(thousands, except share and per share amounts)

(5) Fair Value of Financial Instruments (Continued)

levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following:

•

Level 1—Quoted prices in active markets for identical assets or liabilities.

•

Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

•

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, including an amendment of FASB Statement No. 115 ("SFAS No. 159"), which allows an entity to elect to record financial assets and financial liabilities at fair value upon their initial recognition on a contract-by-contract basis. The Company adopted SFAS No. 159 as of April 1, 2008, and did not elect the fair value option for any of the Company's eligible financial assets and financial liabilities. During fiscal year ended March 31, 2009, the Company elected the fair value option pursuant to SFAS No. 159 to account for the Put Option (as defined and described below) related to the Company's auction-rate securities.

The following table summarizes the Company's financial assets and liabilities measured at fair value on a recurring basis in accordance with SFAS No. 157 as of March 31, 2009:

			Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
	Money market mutual funds		$	16,424	$	—	$	—	$	16,424
Investments:
	Available-for-sales securities—current			23,333		—		—		23,333
	Available-for-sales securities—non-current			21,117		—		904		22,021
	Trading securities—non-current			—		—		6,033		6,033
Derivative instruments—current & non-current				—		585		—		585
Other long-term assets:
	Put Option			—		—		642		642
		Total assets	$	60,874	$	585	$	7,579	$	69,038
Liabilities:
	Derivative instruments—current & non-current		$	—	$	9,301	$	—	$	9,301
		Total liabilities	$	—	$	9,301	$	—	$	9,301

The Company's investments in auction-rate securities and the related Put Option are classified within Level 3 because there are currently no active markets or observable market prices. Therefore, the auction-rate securities and related Put Option were valued primarily based on an income approach using an estimate of future cash flows. The Company has estimated the fair value using a discounted cash flow

82

Virtusa Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(thousands, except share and per share amounts)

(5) Fair Value of Financial Instruments (Continued)

analysis which considered the following key inputs: (i) the underlying structure and maturity of each security; (ii) the timing of expected future principal and interest payments; and (iii) discount rates that are believed to reflect current market conditions and the relevant risk associated with each security.

Level 3 assets as listed in the table above include auction-rate securities whose underlying assets are generally student loans which are substantially backed by the U.S. federal government. In February 2008, auctions began to fail for these securities and each auction since then has failed. As of March 31, 2008, due to the auction failures, the Company reclassified its investment in auction-rate securities from short-term investments to long-term investments, reflecting the fact that the Company's auction-rate securities had underlying final maturities of greater than one year and the Company's intent and ability to hold the securities beyond one year. These investments were recorded at fair value at March 31, 2009 and 2008, respectively.

The following table provides a summary of changes in fair value of the Company's Level 3 financial assets as of March 31, 2009:

		Level 3 Assets
Balance at April 1, 2008		$	7,965
Auction-rate securities redeemed at par value			(675	)
Total unrealized gains (losses):
	Included in earnings, net		—
	Included in accumulated other comprehensive income		289
Balance at March 31, 2009		$	7,579

During the fiscal year ended March 31, 2009, the Comapny recognized unrealized gains on certain auction-rate securities, which were fully offset by the unrealized loss on the Put Option.

83

Virtusa Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(thousands, except share and per share amounts)

(6) Property and Equipment

Property and equipment and their estimated useful lives in years consists of the following:

		March 31,
	Estimated Useful Life (Years)
		2009		2008
Computer equipment	3	$	14,427	$	17,043
Furniture and fixtures	7		2,278		1,768
Vehicles	4		149		229
Software	3		4,726		3,689
Leasehold improvements	Lesser of estimated useful life or lease term		3,933		3,476
Buildings	15 - 30		9,482		—
Land			390		—
Capital work-in-progress			1,710		9,559
			37,095		35,764
Less—accumulated depreciation and amortization			17,415		18,931
		$	19,680	$	16,833

Depreciation and amortization expense for the fiscal years ended March 31, 2009, 2008 and 2007 was $4,406, $3,923 and $3,272, respectively. Capital work-in-progress represents advances paid towards the acquisition of property and equipment and the cost of property and equipment not put to use before the balance sheet date.

(7) Accrued liabilities

Accrued liabilities consist of the following:

		March 31, 2009		March 31, 2008
Accrued taxes		$	1,082	$	2,564
Accrued professional fees			1,633		1,317
Accrued miscellaneous			4,632		2,996
	Total	$	7,347	$	6,877

(8) Debt

The Company has a $3,000 revolving line of credit with a bank with a $1,500 sub-limit for letters of credit as of March 31, 2009. The revolving line of credit also includes a foreign exchange line of credit requiring 15% of the notional amount of the foreign exchange contracts to be supported by the Company's borrowing base. Advances under this credit facility accrue interest at an annual rate equal to 2.5% plus the greater of i) the prime rate or ii) 3.25%. The credit facility is secured by the grant of a security interest in certain of the Company's U.S. assets in favor of the bank and contains financial and reporting covenants

84

Virtusa Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(thousands, except share and per share amounts)

(8) Debt (Continued)

and limitations. The Company is currently in compliance with all covenants contained in its credit facility and believes that the credit facility provides sufficient flexibility so that it will remain in compliance with its terms. The Company has a $300 outstanding letter of credit under the facility to collateralize the office lease in Westborough, MA. As of March 31, 2009, there are no other amounts outstanding under this credit facility. The Company is currently renegotiating the credit facility, which expires on June 29, 2009. The Company had no amounts outstanding, other than the letter of credit referenced above,under this credit facility as of March 31, 2009.

Beginning in fiscal 2009, the Company's U.K. subsidiary entered into an agreement with an unrelated financial institution to sell, without recourse, certain of its European-based accounts receivable balances from one client to such third party financial institution. During the course of fiscal 2009, $4,000 of receivables were sold under the terms of the financing agreement. Fees paid pursuant to this agreement were immaterial during the current fiscal year. No amounts were due as of March 31, 2009, but the Company may elect to utilize this program again in future periods. However, the Company cannot provide any assurances that this or any other financing facilities will be available or utilized in the future.

(9) Treasury Stock

Since July 2008, the Company has had a stock repurchase program in place that authorized the purchase of up to $15,000 of the shares of the Company's outstanding common stock on or prior to July 28, 2009 subject to certain price and other trading restrictions. During the fiscal year ended March 31, 2009, the Company purchased an aggregate of 1,339,823 shares of its common stock for an aggregate purchase price of approximately $7,802, representing an average purchase price per share of $5.82. Repurchased shares have been recorded as treasury shares and will be held until the Company's board of directors designates that these shares be retired or used for other purposes.

(10) Stock Options, Restricted Stock Awards and Stock Appreciation Rights

The Company's Amended and Restated 2000 Stock Option Plan (the 2000 Plan), was adopted in the fiscal year ended March 31, 2001 under which shares were reserved for issuance to the Company's employees, directors, and consultants. The 2000 Plan was amended over the years to reduce the number of shares reserved for issuance to a total of 3,281,149 as of March 31, 2009. Options granted under the 2000 Plan may be incentive stock options, nonqualified stock options or restricted stock. Incentive stock options may only be granted to employees. Options granted have a term of ten years and generally vest over four years. The Company settles employee stock option exercises with newly issued shares. The compensation committee of the board of directors determines the term of awards on an individual case basis. The exercise price of incentive stock options shall be no less than 100% of the fair market value per share of the Company's common stock on the grant date. If an individual owns stock representing more than 10% of the outstanding shares, the price of each share shall be at least 110% of fair market value.

In July 2005, the Company adopted the Virtusa Corporation 2005 Stock Appreciation Rights Plan (the SAR Plan). Under the SAR Plan, the Company may grant up to 479,233 SARs to employees and consultants of Virtusa and its foreign subsidiaries, and settles the SARs in cash or common stock, as set forth in the SAR Plan. Prior to the Company's IPO, the SARs could only be settled in cash. After the Company's IPO, the cash settlement feature of the SARs ceased and exercises may only be settled in shares of the Company's common stock.

85

Virtusa Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(thousands, except share and per share amounts)

(10) Stock Options, Restricted Stock Awards and Stock Appreciation Rights (Continued)

The Company's board of directors and its stockholders approved the Company's 2007 Stock Option and Incentive Plan (the 2007 Plan), in May 2007, and the stockholders of the Company again approved the 2007 Plan in September 2008. The 2007 Plan permits the Company to make grants of incentive stock options, non-qualified stock options, SARs, deferred stock awards, restricted stock awards, unrestricted stock awards, and dividend equivalent rights. The Company reserved 830,670 shares of its common stock for the issuance of awards under the 2007 Plan. The 2007 Plan provides that the number of shares reserved and available for issuance under the plan will be automatically increased each April 1, beginning in 2008, by 2.9% of the outstanding number of shares of common stock on the immediately preceding March 31 or such lower number of shares of common stock as determined by the board of directors. This number is subject to adjustment in the event of a stock split, stock dividend or other change in the Company's capitalization. Generally, shares that are forfeited or canceled from awards under the 2007 Plan also will be available for future awards. In addition, available shares under the 2000 Plan and the SAR Plan, as a result of the forfeiture, expiration, cancellation, termination or net issuances of awards, are automatically made available for issuance under the 2007 Plan. In May 2007, the Company's board of directors determined that no further grants would be made under the 2000 Plan or the SAR Plan.

The following tables summarize stock option and restricted stock award activity under the 2000 Plan and the 2007 Plan for the fiscal years ended March 31, 2009, 2008 and 2007:

	Number of Options to Purchase Common Shares			Weighted Average Exercise Price
Outstanding at March 31, 2006		1,950,015		$	3.29
Granted		610,032			5.46
Exercised		(82,899	)		1.55
Forfeited		(134,746	)		5.05
Outstanding at March 31, 2007		2,342,402			3.82
Granted		464,524			13.88
Exercised		(166,979	)		2.86
Forfeited		(88,190	)		5.93
Outstanding at March 31, 2008		2,551,757			5.64
Granted		613,504			8.52
Exercised		(491,489	)		2.54
Forfeited		(324,291	)		8.06
Outstanding at March 31, 2009		2,349,481			4.94

86

Virtusa Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(thousands, except share and per share amounts)

(10) Stock Options, Restricted Stock Awards and Stock Appreciation Rights (Continued)

	Restricted Stock Activity
	Number of Restricted Stock Awards			Weighted Average Issuance Price
Outstanding at March 31, 2008		—			—
Awarded		628,860		$	7.86
Released		(98,861	)		9.36
Forfeited		(49,119	)		7.53
Outstanding at March 31, 2009		480,880			7.59

The following table summarizes options exercisable and shares available for future grant under the 2000 Plan and 2007 Plan at March 31, 2009:

	March 31, 2009
Options exercisable		1,368,430
Shares available for future grant		305,337

The aggregate intrinsic value and weighted average remaining contractual life of stock options outstanding at March 31, 2009 was approximately $3,468 and 6.64 years, respectively. The aggregate intrinsic value, weighted average remaining contractual life and weighted average exercise price of stock options exercisable at March 31, 2009 were $2,985, 5.36 years and $4.94, respectively. The aggregate intrinsic value of options vested during the fiscal year ended March 31, 2009 was $3,293. The aggregate intrinsic value of options exercised during the fiscal years ended March 31, 2009, 2008 and 2007 was $1,572, $1,536 and $381, respectively. The weighted average fair value of options granted during the fiscal year ended March 31, 2009, 2008 and 2007 was $8.52, $13.88 and $2.99, respectively. During the fiscal year ended March 31, 2009, the Company realized $391 of income tax benefit from the exercise of stock options.

87

Virtusa Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(thousands, except share and per share amounts)

(10) Stock Options, Restricted Stock Awards and Stock Appreciation Rights (Continued)

The tables below summarize information about the SAR Plan activity for the fiscal years ended March 31, 2009, 2008 and 2007 as follows:

	SAR Plan Activity
	Number of SARs			Weighted Average Exercise Price
Outstanding at March 31, 2006		183,870		$	3.85
Granted		51,360			4.73
Exercised		(5,223	)		2.13
Forfeited or expired		(33,766	)		4.48
Outstanding at March 31, 2007		196,241			4.04
Granted		—			—
Exercised		(22,466	)		2.68
Forfeited or expired		(22,501	)		4.58
Outstanding at March 31, 2008		151,274			4.12
Granted		—			—
Exercised		(15,945	)		3.32
Forfeited or expired		(22,443	)		4.71
Outstanding at March 31, 2009		112,886			4.11

SARs exercisable and available for future grant at March 31, 2009:

	March 31, 2009
SARs exercisable		78,185
SARs available for future grant		—

The aggregate intrinsic value and weighted average remaining contractual life of outstanding SARs were approximately $258 and 4.95 years at March 31, 2009. The aggregate intrinsic value and weighted average remaining contractual life of the exercisable SARs at March 31, 2009 were approximately $203 and 4.15 years, respectively. The aggregate intrinsic value of SARs exercised during the fiscal years ended March 31, 2009 and 2008 was $80 and $293, respectively.

The weighted average fair value of SARs granted during the fiscal years ended March 31, 2007 was $2.72. There were no SARs granted during the fiscal years ended March 31, 2008 and 2009.

88

Virtusa Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(thousands, except share and per share amounts)

(11) Income Taxes

The income (loss) before income tax expense (benefit) shown below is based on the geographic location to which such income (loss) is attributed for each of the fiscal years ended March 31, 2009, 2008 and 2007:

		Year Ended March 31,
		2009			2008		2007
United States		$	(2,538	)	$	7,878	$	6,811
Foreign			15,406			14,750		8,549
	Total	$	12,868		$	22,628	$	15,360

The provision (benefit) for income taxes for each of the fiscal years ended March 31, 2009, 2008 and 2007 consisted of the following:

			Year Ended March 31,
			2009			2008			2007
Current provision:
	Federal		$	388		$	1,538		$	262
	State			(14	)		863			430
	Foreign			1,764			2,065			717
Total current provision			$	2,138		$	4,466		$	1,409
Deferred provision (benefit):
	Federal		$	(290	)	$	1,587		$	3,195
	State			(23	)		(81	)		540
	Foreign			(1,016	)		(1,115	)		5
Total deferred provision (benefit)			$	(1,329	)	$	391		$	3,740
Change in valuation allowance				—			—			(8,779	)
		Total provision (benefit) for income taxes	$	809		$	4,857		$	(3,630	)

The items which gave rise to differences between the income taxes in the statements of income and the income taxes computed at the U.S. statutory rate are summarized as follows:

		Year Ended March 31,
		2009			2008			2007
Statutory tax rate			34.0	%		34.0	%		34.0	%
U.S. state and local taxes, net of U.S federal income tax effects			(0.5	)		2.1			3.1
Benefit from foreign subsidiaries' tax holidays			(34.6	)		(17.7	)		(13.8	)
Change in valuation allowance			—			—			(56.8	)
Permanent items			6.2			3.6			4.3
Other adjustments			1.2			(0.5	)		5.6
	Effective income tax (benefit) rate		6.3	%		21.5	%		(23.6	)%

89

Virtusa Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(thousands, except share and per share amounts)

(11) Income Taxes (Continued)

Deferred tax assets (liabilities) as of March 31, 2009 and 2008 were as follows:

		March 31,
		2009			2008
Deferred revenue		$	280		$	133
Bad debt reserve			283			232
Depreciation			274			181
Tax credit carryforwards			1,706			1,035
Accrued expenses and reserves			1,047			1,033
Compensation expense			2,091			2,043
Unrealized losses			3,498			673
	Total deferred tax assets	$	9,179		$	5,330
Unrealized gains			(145	)		—
	Total deferred tax liabilities		(145	)		—
	Net deferred tax assets/liabilities	$	9,034		$	5,330

The ultimate realization of deferred tax assets is dependent upon management's assessment of the Company's ability to generate taxable income during the periods in which the temporary differences become deductible. Management considers the historical level of taxable income, projections for future taxable income, and tax planning strategies in making this assessment. The Company has determined that it is more likely than not that the results of future operations will generate sufficient taxable income to realize the deferred tax assets.

During the year ended March 31, 2009, the Company recorded $3,344 of net income tax benefit directly in Other Comprehensive Income related to the unrealized gain/loss on available for sale securities, and the unrealized gain/loss on effective cash flow hedges and the foreign currency loss on certain long term intercompany balances. During the year ended March 31, 2009, the Company recognized $391 of net income tax benefit directly in Additional Paid in Capital related to net excess tax benefits of share-based compensation.

The Company's Indian subsidiaries, collectively referred to as the Indian subsidiaries, are export-oriented companies under the Indian Income Tax Act of 1961 and are entitled to claim tax exemption for a period of ten consecutive years for export profits related to each Software Technology Park, or STP, which they operate. The Indian subsidiaries currently operate two STPs, one in Chennai and one in Hyderabad. Substantially all of the earnings of both STPs qualify as tax-exempt export profits. These holidays will be completely phased out by March 2010, and at that time any STP profits would be fully taxable at the Indian statutory rate, which is currently 34.0%. At March 31, 2009, the Indian subsidiaries have an Indian Minimum Alternative Tax (MAT) credit carryforward of $1,706, which is available to reduce certain future Indian income tax liabilities, and which expires at various dates through 2016. The Indian subsidiaries also operate two development centers in areas designated as a Special Economic Zone, or SEZ, under the SEZ Act of 2005. In particular, the Company is building a campus on a 6.3 acre parcel of land in Hyderabad, India that has been designated as an SEZ. In addition, the Company has leased facilities in an SEZ designated location in Chennai, India. The Company's profits from the SEZ operations are eligible for certain income tax exemptions for a period of up to 15 years beginning in fiscal 2009.

90

Virtusa Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(thousands, except share and per share amounts)

(11) Income Taxes (Continued)

In addition, the Company's Sri Lankan subsidiary, referred to as Virtusa SL, was approved as an export computer software developer by the Sri Lanka Board of Investment in 1998 and has negotiated multiple extensions of the original holiday period in exchange for further capital investments in Sri Lanka facilities. The most recent 12-year agreement, which is set to expire on March 31, 2019, requires that the Company meet certain new job creation and investment criteria in Sri Lanka. The current agreement provides income tax exemption for all business income.

The effect of the India and Sri Lanka income tax holidays was to reduce the overall tax provision and increase both net income and diluted net income per share in the fiscal years ended March 31, 2009, 2008 and 2007 by $4,505, $3,949 and $2,443, respectively, and by $0.19, $0.17 and $0.13, respectively. The India STP holiday, which is set to expire on March 31, 2010, increased net income and diluted net income per share in the fiscal years ended March 31, 2009, 2008 and 2007 by $3,301, $2,834 and $1,956 and by $0.14, $0.12 and $0.11, respectively.

The Company intends to indefinitely reinvest all of its foreign earnings outside of the United States. Pursuant to Accounting Principles Board Opinion (APB) No. 23, Accounting for Income Taxes—Special Areas, no incremental U.S. income taxes have been provided for approximately $46,750 of unremitted earnings of international subsidiaries as of March 31, 2009. Due to the various methods by which such earnings could be repatriated in the future, the amount of taxes attributable to the permanently reinvested undistributed earnings is not practically determinable.

FIN 48 clarifies the accounting for uncertainty in income taxes by prescribing a minimum recognition threshold for a tax position taken or expected to be take in a tax return that is required to be met before being recognized in the financial statements. FIN 48 also provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition. Due to the geographical scope of our operations, the Company is subject to tax examinations in various jurisdictions. The Company's ongoing assessments of the more-likely-than-not outcomes of these examinations and related tax positions require judgment and can increase or decrease our effective tax rate, as well as impact our operating results. The specific timing of when the resolution of each tax position will be reached is uncertain. The Company does not believe that the outcome of any ongoing examination will have a material effect on its consolidated financial statements. The Company's major taxing jurisdictions include the United States, United Kingdom, India, Sri Lanka and the Netherlands. With few exceptions, the Company remains subject to examination for all fiscal years ended after March 31, 2001.

The Company adopted the provisions of FIN 48, on April 1, 2007. The cumulative effect of adopting FIN 48 of $95 was recorded as a reduction to opening retained earnings and an increase to long-term liabilities. The total amount of unrecognized tax benefits of $680 and $756 as of March 31, 2009 and April 1, 2008, respectively, would reduce income tax expense and the effective income tax rate, if recognized. No significant changes in the unrecognized tax benefit balance are expected in the next twelve months.

The following summarizes the activity related to the gross unrecognized tax benefits from April 1, 2008 through March 31, 2009:

Balance as of April 1, 2008	$	756
Foreign currency translation related to prior year tax positions		(115	)
Increases related to prior year tax positions		39
Balance as of March 31, 2009	$	680

91

Virtusa Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(thousands, except share and per share amounts)

(11) Income Taxes (Continued)

The Company continues to classify accrued interest and penalties related to unrecognized tax benefits in income tax expense. The total accrued for interest and penalties relating to certain tax matters in India at March 31, 2009 and March 31, 2008 was $213 and $214, respectively. The total accrued interest and penalties relating to certain tax matters in the United States at March 31, 2009 and March 31, 2008 was $73 and $60, respectively. At March 31, 2009 and March 31, 2008, the Company had $6 and $7 accrued for interest and penalties relating to certain tax matters in the United Kingdom.

Currently, the Company is under income tax examination in India. The Indian taxing authorities issued an assessment order with respect to their examination of the tax returns for the fiscal years ended March 31, 2004 and 2005 of the Company's Indian subsidiary, Virtusa (India) Private Ltd., or Virtusa India. At issue were several matters, the most significant of which was the redetermination of the arm's-length profit which should be recorded by Virtusa India on the intercompany transactions with its affiliates. The Company is contesting the assessment and has filed appeals with both the appropriate Indian tax authorities and the U.S. Competent Authority. As of March 31, 2009, the Company accrued $427 related to this matter. The Indian taxing authorities have started review of fiscal years ending March 31, 2006 and 2007.

(12) Post-retirement Benefits

The Company has noncontributory defined benefit plans (the Benefit Plans) covering its employees in India and Sri Lanka as mandated by the Indian and Sri Lankan governments. Benefits are based on the employee's years of service and compensation. The Company uses March 31 as a measurement date for its plans.

Cost of pension plans

		Year Ended March 31,
		2009			2008			2007
Components of net periodic pension expense
	Expected return on plan assets	$	(90	)	$	(36	)	$	—
	Service costs for benefits earned		338			232			125
	Interest cost on projected benefit obligation		88			61			30
	Recognized net actuarial loss		26			12			—
Net periodic pension expense		$	362		$	269		$	155

Actuarial assumptions

	Year Ended March 31,
	2009		2008		2007
Discount rate		6.75% - 15.75%		8.0% - 15.0%		9.0%
Compensation increases (annual)		5.50% - 10.00%		6.5% - 12.0%		6.5% - 8.0%
Expected return on assets		8.50% - 10.00%		8.0% -  8.5%		—

92

Virtusa Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(thousands, except share and per share amounts)

(12) Post-retirement Benefits (Continued)

Discount rate is based upon high quality fixed income investments in India and Sri Lanka. The discount rates at March 31, 2009 were used to measure the year-end benefit obligations and the earnings effects for the subsequent year.

To determine the expected long-term rate of return on pension plan assets, the Company considers the current and expected asset allocations, as well as historical and expected returns on various categories of plan assets. The Company amortizes unrecognized actuarial gains or losses over a period no longer than the average future service of employees.

The Company's benefit obligations are described in the following tables. Accumulated and projected benefit obligations (ABO and PBO, respectively) represent the obligations of a pension plan for past service as of the measurement date. ABO is the present value of benefits earned to date with benefits computed based on current compensation levels. PBO is ABO increased to reflect expected future compensation.

Accumulated benefit obligation and projected benefit obligation

		March 31,
		2009			2008
Accumulated benefit obligation		$	935		$	628
Projected benefit obligation:
	Balance at April 1,	$	973		$	575
	Service cost		338			232
	Interest cost		88			61
	Actuarial loss		(50	)		167
	Benefits paid		(204	)		(95	)
	Exchange rate adjustments		(177	)		33
	Balance at March 31,	$	968		$	973

Fair value of plan assets

	March 31, 2009
Balance at April 1, 2008	$	976
Employer contributions		303
Actual gain on plan assets		68
Benefits paid		(204	)
Exchange rate adjustments		(177	)
Balance at March 31, 2009	$	966

93

Virtusa Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(thousands, except share and per share amounts)

(12) Post-retirement Benefits (Continued)

Plan asset allocation

	March 31, 2009
	Target Allocation		Actual Allocation
Government securities		70 - 80%		75%
Corporate debt		10 - 20%		18%
Other		1 - 10%		7%

The Company's plan assets are being managed by the respective insurance companies in India and Sri Lanka.

Pension liability

		March 31,
		2009		2008
PBO		$	968	$	973
Fair value of plan assets			966		976
Funded status recognized		$	2	$	(3	)
Amount recorded in stockholders' equity
	Net actuarial loss	$	202	$	303

The amount in accumulated other comprehensive income (loss) that is expected to be recognized as a component of net periodic benefit cost over the fiscal year ending March 31, 2010 is $16. The Company expects to contribute $290 to its gratuity plans during the fiscal year ending March 31, 2010.

The pretax amounts or prior service cost recognized in Accumulated Other Comprehensive income consists of:

	March 31,
	2009			2008		2007
Prior Service Cost (credit),	$	(31	)	$	—	$	—
Net Amortization Gain (Loss)		(13	)		—		—
Total	$	(44	)	$	—	$	—

Estimated future benefits payments

Fiscal year ending March 31:
	2010	$	157
	2011		199
	2012		231
	2013		317
	2014		383
	2015 - 2019		2,130

94

Virtusa Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(thousands, except share and per share amounts)

(13) 401(k) Plan

The Company sponsors a defined contribution retirement savings plan, qualified under Section 401(k) of the Internal Revenue Code (the "401(k) Plan"). Eligible employees may defer a portion of their compensation into the 401(k) Plan on a pre-tax and/or Roth basis. The 401(k) Plan currently offers a safe harbor match feature that provides Company matching contributions for certain employee contributions. The Company accounts for these matching contributions on an accrual basis. At March 31, 2009 and 2008, the Company accrued $187 and $21 for the employer match, respectively. The 401(k) Plan may be amended at the direction of the Board to discontinue the safe harbor match program at any time.

(14) Related Party Transactions

During the fiscal years ended March 31, 2009, 2008 and 2007, the Company purchased approximately $7, $387, and $1,048, respectively, in services from Lotus Travel Services. The managing director of Lotus Travel Services is a relative of an executive officer of the Company.

During the fiscal year ended March 31, 2007, the Company made capital and operating lease payments for equipment of approximately $230 to Alliance Finance Company. Relatives of an executive officer of the Company are directors of Alliance Finance Company.

(15) Commitments, Contingencies and Guarantees

The Company leases office space under operating leases, which expire at various dates through the year 2014. Certain leases contain renewal provisions and generally require the Company to pay utilities, insurance, taxes, and other operating expenses.

Future minimum lease payments under non-cancelable operating leases at March 31, 2009 are:

		Operating Leases
Fiscal year ending March 31:
	2010	$	4,257
	2011		2,884
	2012		1,734
	2013		1,188
	2014 and thereafter		170
		$	10,233

The operating lease commitment for the fiscal year ending March 31, 2010 is net of $140 of sublease income. Total rental expense was approximately $4,706, $5,957 and $3,417 for the fiscal years ended March 31, 2009, 2008 and 2007, respectively.

The Company continues to construct a facility as part of a planned campus on a 6.3 acre site in Hyderabad, India which includes planned construction of approximately 340,000 square feet, over the next two fiscal years at a total estimated cost of $22,700, of which $13,714 was spent as of March 31, 2009. As of March 31, 2009, the Company had outstanding fixed capital commitments of $9,137, net of advances, related to this facility construction.

95

Virtusa Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(thousands, except share and per share amounts)

(15) Commitments, Contingencies and Guarantees (Continued)

The Company has deposits under lien of $186 against a bank guarantee issued by a bank in favor of Andhra Pradesh Industrial Infrastructure Corporation Limited which would be forfeited if the Company fails to meet certain hiring criteria with established timelines at its Hyderabad facility.

The Company indemnifies its officers and directors for certain events or occurrences under charter and indemnification agreements while the officer or director is, or was serving, at its request in a defined capacity. The term of the indemnification period is for the officer's or director's lifetime. The maximum potential amount of future payments the Company could be required to make under these indemnification obligations is unlimited. The costs incurred to defend lawsuits or settle claims related to these indemnification obligations have not been material. As a result, the Company believes that its estimated exposure on these obligations is minimal. Accordingly, the Company had no liabilities recorded for these obligations as of March 31, 2009.

The Company is insured against any actual or alleged act, error, omission, neglect, misstatement or misleading statement or breach of duty by any current or former officer, director or employee while rendering information technology services. The Company believes that its financial exposure from such actual or alleged actions, should they arise, is minimal and no liability was recorded at March 31, 2009.

The Company is not a party to any pending litigation or other legal proceedings that are likely to have a material adverse affect on its financial statements.

(16) Derivative Financial Instruments and Trading Activities

The Company enters into foreign currency derivative contracts to mitigate the risk of changes in foreign exchange rates on intercompany transactions and forecasted transactions denominated in foreign currencies, particularly between the Indian rupee and the U.S. dollar and the U.K. pound sterling. The notional principal amounts of these foreign currency derivative contracts as of March 31, 2009 and 2008 were $57,603 and $73,101, respectively.

During the fiscal years ended March 31, 2009 and 2008, the Company entered into certain foreign currency derivative contracts which met the criteria for hedge accounting as cash flow hedges pursuant to SFAS No. 133. Changes in the fair values of these hedges are deferred and recorded as a component of accumulated other comprehensive income (loss) until the hedged transactions occur and are then recognized in the consolidated statements of income in the same line item as the hedged item, whether it be to cost of sales or operating expenses. During the fiscal year ended March 31, 2009, the Company recognized $122 due to ineffective hedges in the consolidated statements of income. During the next 12 months, net losses on derivative instruments included in accumulated other comprehensive income of approximately $7,315 are expected to be reclassified into earnings.

In connection with the cash flow hedges, the Company has recorded an unrealized loss of $4,322 and $931, net of tax as a component of accumulated other comprehensive income (loss) within stockholder's equity as of March 31, 2009 and 2008, respectively.

Foreign currency (gains) losses on settlement of cash flow hedges were $5,919, $(272) and $202 during the fiscal years ended March 31, 2009, 2008 and 2007, respectively, which were recorded in operating income.

96

Virtusa Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(thousands, except share and per share amounts)

(17) Business Segment Information

The Company's Chief Operating Decision Maker (CODM) reviews discrete financial information for the Company's operations in the following operating segments: (i) the communications content and technology operating segment, which includes communications and technology; (ii) the banking financial services and insurance; and (iii) media and information operating segment. The CODM reviews historical forecast, summary and detailed revenue and margin information to monitor the operating performance and assess overall profitability of the Company. Discrete financial information is not available or reviewed by the CODM for any of the industries contained within these operating segments. The Company aggregates the three operating segments into a single reportable segment, information technology services.

Geographic information:

Total revenue is attributed to geographic areas based on location of the client. Geographic information is summarized as follows:

		Year Ended March 31,
		2009		2008		2007
Customer revenue:
	North America	$	124,582	$	113,447	$	92,356
	Europe		44,368		51,125		31,887
	Other		3,992		626		417
	Consolidated revenue	$	172,942	$	165,198	$	124,660

		March 31,
		2009		2008
Long-lived assets, net of accumulated depreciation:
	United States	$	1,376	$	1,843
	India		15,636		11,758
	Sri Lanka		2,649		3,194
	United Kingdom		19		38
	Consolidated long-lived assets, net	$	19,680	$	16,833

97

Virtusa Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(thousands, except share and per share amounts)

(18) Quarterly Results of Operations (unaudited)

	Three Months Ended
	March 31, 2009		December 31, 2008		September 30, 2008			June 30, 2008			March 31, 2008		December 31, 2007		September 30, 2007		June 30, 2007
Revenue	$	41,437	$	44,940	$	44,022		$	42,543		$	45,040	$	42,455	$	40,257	$	37,446
Costs of revenue		23,402		25,286		28,344			28,068			24,904		23,307		23,038		21,598
Gross profit		18,035		19,654		15,678			14,475			20,136		19,148		17,219		15,848
Operating expenses		14,132		14,279		14,989			14,464			14,521		13,281		12,510		12,660
Income from operations		3,903		5,375		689			11			5,615		5,867		4,709		3,188
Other income		277		2,030		(199	)		780			1,163		1,096		801		189
Income before income tax expense (benefit)		4,180		7,405		490			791			6,778		6,963		5,510		3,377
Income tax expense (benefit)		562		1,107		(806	)		(54	)		1,519		1,706		943		689
Net income	$	3,618	$	6,298	$	1,296		$	845		$	5,259	$	5,257	$	4,567	$	2,688
Net income per share—Basic	$	0.16	$	0.28	$	0.06		$	0.04		$	0.23	$	0.23	$	0.21	$	0.15
Net income per share—Diluted		0.15		0.27		0.05			0.03			0.21		0.21		0.20		0.13

(19) Subsequent Events

On April 3, 2009, the Company purchased multiple foreign currency forward contracts designed to hedge fluctuation in the U.K. pound sterling against the U.S. dollar. The contracts have an aggregate notional amount of approximately £1,757 (approximately $2,582) and will expire on various dates during the period ending June 30, 2009. The weighted average U.K. pound sterling rate associated with these contracts is approximately 1.47.

On May 28, 2009, Virtusa Corporation (the "Company") purchased multiple foreign currency forward contracts designed to hedge fluctuation in the Indian rupee against the U.S. dollar and U.K. pound sterling. The U.S dollar contracts have an aggregate notional amount of approximately 228,189 Indian rupees (approximately $4,711) and an average settlement rate of 48.44 Indian rupees. The U.K. pound sterling contracts have an aggregate notional amount of approximately 57,048 Indian rupees (approximately £744) and have an average settlement rate of 76.65 Indian rupees. These contracts will expire at various dates during the period ending on March 31, 2011. The Company has the obligation to settle these contracts based upon the Reserve Bank of India published Indian rupee exchange rates. Based on the U.S. dollar to U.K. pound sterling spot rate on May 28 of $1.59, the blended weighted average Indian rupee rate associated with both the U.S. dollar and U.K. pound sterling contracts would be approximately 48.39 Indian rupees. Such blended weighted average Indian rupee rate is subject to change, to the extent of any appreciation or deprecation in the U.K. pound sterling against the U.S. dollar, as compared to the spot rate listed above. In addition, the Company pledged to a bank an additional $2,500 as restricted cash as collateral for the settlement with respect to such foreign currency forward contracts. The Company has an aggregate of $5,000 of restricted cash pledged to this bank as collateral for the Company's foreign currency forward contracts with such bank.

98

Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A.    Controls and Procedures.

(1) Evaluation of Disclosure Controls and Procedures

We have carried out an evaluation, under the supervision and the participation of our management of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Securities Exchange Act), as of March 31, 2009. Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of the end of that period, our disclosure controls and procedures are effective in providing reasonable assurance that (a) the information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and (b) such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

(2) Report of Management on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act as a process designed by, or under the supervision of, a company's principal executive and principal financial officers and effected by a company's board of directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:

•

pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

•

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

•

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management assessed the effectiveness of our internal control over financial reporting as of March 31, 2009. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework.

Based on our assessment, our management has concluded that, as of March 31, 2009, our internal control over financial reporting is effective based on those criteria.

99

The effectiveness of our internal control over financial reporting as of March 31, 2009 has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their report, which is included herein.

(3) Changes in Internal Controls Over Financial Reporting

Section 404 of the Sarbanes-Oxley Act of 2002 requires us to evaluate annually the effectiveness of our internal controls over financial reporting as of the end of each fiscal year, and to include a management report assessing the effectiveness of our internal control over financial reporting in all annual reports. There were no changes in our internal control over financial reporting during the fiscal year ended March 31, 2009 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B.    Other Information.

None.

100

PART III

Item 10.    Directors, Executive Officers and Corporate Governance.

The information required under this item is incorporated herein by reference to the Company's definitive proxy statement pursuant to Regulation 14A, which proxy statement is expected to be filed with the Securities and Exchange Commission not later than 120 days after the close of the Company's fiscal year ended March 31, 2009.

Item 11.    Executive Compensation.

The information required under this item is incorporated herein by reference to the Company's definitive proxy statement pursuant to Regulation 14A, which proxy statement is expected to be filed with the Securities and Exchange Commission not later than 120 days after the close of the Company's fiscal year ended March 31, 2009.

Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The information required under this item is incorporated herein by reference to the Company's definitive proxy statement pursuant to Regulation 14A, which proxy statement is expected to be filed with the Securities and Exchange Commission not later than 120 days after the close of the Company's fiscal year ended March 31, 2009.

Item 13.    Certain Relationships and Related Transactions, and Director Independence.

The information required under this item is incorporated herein by reference to the Company's definitive proxy statement pursuant to Regulation 14A, which proxy statement is expected to be filed with the Securities and Exchange Commission not later than 120 days after the close of the Company's fiscal year ended March 31, 2009.

Item 14.    Principal Accountant Fees and Services.

The information required under this item is incorporated herein by reference to the Company's definitive proxy statement pursuant to Regulation 14A, which proxy statement is expected to be filed with the Securities and Exchange Commission not later than 120 days after the close of the Company's fiscal year ended March 31, 2009.

101

PART IV

Item 15.    Exhibits and Financial Statement Schedules.

The following are filed as part of this Annual Report on Form 10-K:

1. Financial Statements

The following consolidated financial statements are included in Item 8:

Reports of Independent Registered Public Accounting Firm	62
Consolidated Balance Sheets at March 31, 2009 and 2008	64
Consolidated Statements of Income for the Years ended March 31, 2009, 2008 and 2007	65
Consolidated Statements of Stockholders' Equity (Deficit) and Comprehensive Income (Loss) for the Years ended March 31, 2009, 2008 and 2007	66
Consolidated Statements of Cash Flows for the Years ended March 31, 2009, 2008 and 2007	67
Notes to Consolidated Financial Statements	68

2. Financial Statement Schedules

The financial statement schedule entitled "Schedule II—Valuation and Qualifying Accounts" is filed as part of this Annual Report on Form 10-K under this Item 15.

All other schedules have been omitted since the required information is not present, or not present in amounts sufficient to require submission of the schedule, or because the information required is included in the Consolidated Financial Statements or the Notes thereto.

102

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
Virtusa Corporation and Subsidiaries:

Under date of May 28, 2009, we reported on the consolidated balance sheets of Virtusa Corporation and Subsidiaries (the Company) as of March 31, 2009 and 2008, and the related consolidated statements of income, changes in stockholders' equity (deficit) and comprehensive income (loss), and cash flows for each of the years in the three-year period ended March 31, 2009, which are contained in the March 31, 2009 annual report on Form 10-K. In connection with our audits of the aforementioned consolidated financial statements, we also audited the related consolidated financial statement schedule of Valuation and Qualifying Accounts in this Form 10-K. This financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion on this financial statement schedule based on our audits.

In our opinion, such financial statement schedule when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

/s/ KPMG LLP

Boston, Massachusetts
May 28, 2009

103

Virtusa Corporation and Subsidiaries

Schedule II—Valuation and Qualifying Accounts
For the years ended March 31, 2009, 2008, and 2007

Description	Balance at Beginning of Period		Charged to Costs and Expenses		Deductions/ Other			Balance at End of Period
	(In thousands)
Accounts receivable allowance for doubtful accounts:
Year ended March 31, 2007	$	415	$	202	$	(197	)	$	420
Year ended March 31, 2008	$	420	$	440	$	(207	)	$	653
Year ended March 31, 2009	$	653	$	533	$	(145	)	$	1,041

104

3. Exhibits

The following exhibits are filed as part of and incorporated by reference into this Annual Report:

Exhibit No.			Exhibit Title
	3.1		Amended and Restated By-laws of the Registrant (previously filed as Exhibit 3.2 to the Registrant's Registration Statement on Form S-1, as amended (Registration No. 333-141952) and incorporated herein by reference).
	3.2		Form of Seventh Amended and Restated Certificate of Incorporation of the Registrant (previously filed as Exhibit 3.3 to the Registrant's Registration Statement on Form S-1, as amended (Registration No. 333-141952) and incorporated herein by reference).
	4.1		Specimen certificate evidence shares of the Registrant's common stock (previously filed as Exhibit 4.1 to the Registrant's Registration Statement on Form S-1, as amended (Registration No. 333-141952) and incorporated herein by reference).
	4.2		Fourth Amended and Restated Registration Rights Agreement by and among the Registrant and the Investors named therein, dated as of March 29, 2007 (previously filed as Exhibit 4.2 to the Registrant's Registration Statement on Form S-1, as amended (Registration No. 333-141952) and incorporated herein by reference).
	10.1		Lease Agreement by and between the Registrant and W9/TIB Real Estate Limited Partnership, dated June 2000, as amended (previously filed as Exhibit 10.3 to the Registrant's Registration Statement on Form S-1, as amended (Registration No. 333-141952) and incorporated herein by reference).
	10.3	+	Amended and Restated 2000 Stock Option Plan and forms of agreements thereunder (previously filed as Exhibit 10.4 to the Registrant's Registration Statement on Form S-1, as amended (Registration No. 333-141952) and incorporated herein by reference).
	10.4	+	2005 Stock Appreciation Rights Plan and form of agreements thereunder (previously filed as Exhibit 10.5 to the Registrant's Registration Statement on Form S-1, as amended (Registration No. 333-141952) and incorporated herein by reference).
	10.5	†	Material Service Provider Agreement by and between the Registrant and JPMorgan Chase Bank, N.A., dated as of December 6, 2004, as amended (previously filed as Exhibit 10.6 to the Registrant's Registration Statement on Form S-1, as amended (Registration No. 333-141952) and incorporated herein by reference).
	10.6	*	Amendment No. 236169, dated as of March 1, 2008 to the Master Service Provider Agreement by and between the Registrant and JPMorgan Chase Bank, N.A.
	10.7	*†	Amendment No. 3, dated as of January 1, 2009 to the Master Service Provider Agreement by and between the Registrant and JPMorgan Chase Bank, N.A.
	10.8	+	Form of Indemnification Agreement between the Registrant and each of its directors (previously filed as Exhibit 10.7 to the Registrant's Registration Statement on Form S-1, as amended (Registration No. 333-141952) and incorporated herein by reference).
	10.9	†	Provision of IT Services for BT Contract by and between the Registrant and British Telecommunications plc, dated as of March 29, 2007, as amended by Amendment Nos. 1-4 (previously filed as Exhibit 10.7 to the Registrant's Annual Report on Form 10-K, filed June 3, 2008, and incorporated herein by reference).

105

Exhibit No.			Exhibit Title
	10.10	*†	Amendment No. 5 to the BT Contract by and between Registrant and British Telecommunications plc, dated as of March 31, 2009.
	10.11	*†	Master Services Agreement between the Registrant and Metavante Corporation dated as of March 23, 2004, as amended by Nos. 1-6.
	10.12		Amended and Restated Credit Agreement between Registrant and Citizens Bank of Massachusetts, dated as of September 29, 2006, as amended by Amendment Nos. 1-4 thereto, including Amended and Restated Revolving Credit Note, Amended and Restated Security Agreement, Negative Pledge Agreement and Stock Pledge Agreement, each dated as of September 29, 2006 (previously filed as Exhibit 10.8 to the Registrant's Annual Report on Form 10-K, filed June 3, 2008, and incorporated herein by reference).
	10.13		Fifth Amendment to Amended and Restated Credit Agreement between Registrant and Citizens Bank of Massachusetts, dated as of July 30, 2008 (previously filed as Exhibit 10.2 to the Registrant's Quarterly Report on Form 10-Q, filed August 1, 2008, and incorporated herein by reference).
	10.14	*	Sixth Amendment to Amended and Restated Credit Agreement between Registrant and Citizens Bank of Massachusetts, dated as of March 31, 2009.
	10.15	+	Executive Agreement between the Registrant and Kris Canekeratne, dated as of April 5, 2007 (previously filed as Exhibit 10.10 to the Registrant's Registration Statement on Form S-1, as amended (Registration No. 333-141952) and incorporated herein by reference).
	10.16	+	Executive Agreement between the Registrant and Danford F. Smith, dated as of April 5, 2007 (previously filed as Exhibit 10.11 to the Registrant's Registration Statement on Form S-1, as amended (Registration No. 333-141952) and incorporated herein by reference).
	10.17	+	Executive Agreement between the Registrant and Thomas R. Holler, dated as of April 5, 2007 (previously filed as Exhibit 10.12 to the Registrant's Registration Statement on Form S-1, as amended (Registration No. 333-141952) and incorporated herein by reference).
	10.18	+	Executive Agreement between the Registrant and Roger Keith Modder, dated as of April 5, 2007 (previously filed as Exhibit 10.13 to the Registrant's Registration Statement on Form S-1, as amended (Registration No. 333-141952) and incorporated herein by reference).
	10.19	+	Executive Agreement between the Registrant and T.N. Hari, dated as of April 5, 2007 (previously filed as Exhibit 10.14 to the Registrant's Registration Statement on Form S-1, as amended (Registration No. 333-141952) and incorporated herein by reference).
	10.20	+	Offer Letter by and between Ranjan Kalia and Registrant dated as of April 16, 2008 (previously filed as Exhibit 10.3 to the Registrant's Quarterly Report on Form 10-Q, filed October 31, 2008, and incorporated herein by reference).
	10.21	+	FY2009 Bonus Plan by and between Raj Rajgopal and Registrant for the fiscal year ending March 31, 2009(previously filed as Exhibit 10.4 to the Registrant's Quarterly Report on Form 10-Q, filed October 31, 2008, and incorporated herein by reference).
	10.22	+	Separation Agreement between the Registrant and Mr. Danford Smith dated as of August 28, 2008 (previously filed as Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed August 29, 2008, and incorporated herein by reference).

106

Exhibit No.			Exhibit Title
	10.23		Co-Developer Agreement and Lease Deed between the Registrant and APIICL, a state government agency in India, dated as of March 2007 (previously filed as Exhibit 10.15 to the Registrant's Registration Statement on Form S-1, as amended (Registration No. 333-141952) and incorporated herein by reference).
	10.24	+	2007 Stock Option and Incentive Plan, including Form of Incentive Stock Option Agreement, Form of Non-Qualified Stock Option Agreement for Company Employees, Form of Non-Qualified Stock Option Agreement for Non-Employee Directors, and Form of Employee Restricted Stock Agreement (previously filed as Exhibit 10.15 to the Registrant's Annual Report on Form 10-K, filed June 3, 2008, and incorporated herein by reference).
	10.25		Fifth Amended and Restated Stockholders Agreement by and among the Registrant and the Stockholders named therein, dated as of March 29, 2007 (previously filed as Exhibit 10.17 to the Registrant's Registration Statement on Form S-1, as amended (Registration No. 333-141952) and incorporated herein by reference).
	10.26		Agreement for Civil and Structural Works, including the General Conditions of the Contract by and between Virtusa (India) Private Limited and Shapoorji Pallionji & Company Limited, dated as of July 2, 2007 (previously filed as Exhibit 10.18 to the Registrant's Registration Statement on Form S-1, as amended (Registration No. 333-141952) and incorporated herein by reference).
	10.27	+	FY 2007 Executive Variable Incentive Cash Compensation Program (previously filed as Exhibit 10.19 to the Registrant's Registration Statement on Form S-1, as amended (Registration No. 333-141952) and incorporated herein by reference).
	10.28	+	Non-Employee Director Compensation Policy (previously filed as Exhibit 10.20 to the Registrant's Registration Statement on Form S-1, as amended (Registration No. 333-141952) and incorporated herein by reference).
	10.29	+	FY2008 Virtusa Corporation Variable Cash Compensation Plan (previously filed as Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q, filed September 7, 2007, and incorporated herein by reference).
	10.30	+	FY2009 Virtusa Corporation Executive Variable Cash Compensation Plan (previously filed as Exhibit 10.2 to the Registrant's Quarterly Report on Form 10-Q, filed October 31, 2008, and incorporated herein by reference).
	10.31		Lease Deed by and between DLF Assets Private Limited and Virtusa Software Services Pvt. Ltd. dated as of July 21, 2008 (previously filed as Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q, filed August 1, 2008, and incorporated herein by reference).
	10.32		LEASE DEED by and between Andhra Pradesh Industrial Infrastructure Corporation Limited and Virtusa (India) Private Limited dated as of August 22, 2007 previously filed as Exhibit 10.2 to the Registrant's Quarterly Report on Form 10-Q, filed September 7, 2007, and incorporated herein by reference).
	21.1		Subsidiaries of Registrant (previously filed as Exhibit 21.1 to the Registrant's Annual Report on Form 10-K, filed June 3, 2008, and incorporated herein by reference).
	23.1	*	Consent of KPMG LLP
	24.1	*	Power of Attorney (included on signature page)

107

Exhibit No.			Exhibit Title
	31.1	*	Certification of principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	31.2	*	Certification of principal accounting and financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	32.1	**	Certification of principal executive officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. 1350
	32.2	**	Certification of principal accounting and financial officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. 1350

+

Indicates a management contract or compensation plan, contract or arrangement.

†

Confidential treatment has been requested for certain provisions of this Exhibit.

*

Filed herewith.

**

Furnished herewith. This certification shall not be deemed filed for any purpose, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act of 1933, amended or the Exchange Act of 1934, as amended.

108

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on the 28th day of May, 2009.

	VIRTUSA CORPORATION
	By:	/s/ Kris Canekeratne Kris Canekeratne Chairman and Chief Executive Officer (Principal Executive Officer)
Date: May 28, 2009

POWER OF ATTORNEY AND SIGNATURES

We the undersigned officers and directors of Virtusa Corporation, hereby severally constitute and appoint Kris Canekeratne and Ranjan Kalia, and each of them singly, our true and lawful attorneys, with full power to them and each of them singly, to sign for us and in our names in the capacities indicated below, any amendments to this Annual Report on Form 10-K, and generally to do all things in our names and on our behalf in such capacities to enable Virtusa Corporation to comply with the provisions of the Securities Act of 1934, as amended, and all the requirements of the Securities Exchange Commission.

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on the 28th day of May, 2009.

Signature	Title
/s/ Kris Canekeratne Kris Canekeratne	Chairman and Chief Executive Officer (Principal Executive Officer)
/s/ Ranjan Kalia Ranjan Kalia	Senior Vice President of Finance and Chief Financial Officer (Principal Financial and Accounting Officer)
/s/ Robert E. Davoli Robert E. Davoli	Director
/s/ Izhar Armony Izhar Armony	Director
/s/ Ronald T. Maheu Ronald T. Maheu	Director
/s/ Martin Trust Martin Trust	Director
/s/ Rowland Moriarty Rowland Moriarty	Director
/s/ William K. O'Brien William K. O'Brien	Director

109

Exhibit Index

Exhibit No.			Exhibit Title
	3.1		Amended and Restated By-laws of the Registrant (previously filed as Exhibit 3.2 to the Registrant's Registration Statement on Form S-1, as amended (Registration No. 333-141952) and incorporated herein by reference).
	3.2		Form of Seventh Amended and Restated Certificate of Incorporation of the Registrant (previously filed as Exhibit 3.3 to the Registrant's Registration Statement on Form S-1, as amended (Registration No. 333-141952) and incorporated herein by reference).
	4.1		Specimen certificate evidence shares of the Registrant's common stock (previously filed as Exhibit 4.1 to the Registrant's Registration Statement on Form S-1, as amended (Registration No. 333-141952) and incorporated herein by reference).
	4.2		Fourth Amended and Restated Registration Rights Agreement by and among the Registrant and the Investors named therein, dated as of March 29, 2007 (previously filed as Exhibit 4.2 to the Registrant's Registration Statement on Form S-1, as amended (Registration No. 333-141952) and incorporated herein by reference).
	10.1		Lease Agreement by and between the Registrant and W9/TIB Real Estate Limited Partnership, dated June 2000, as amended by a First Amendment thereto, dated as of November 2000, and a Second Amendment and Extension of Lease thereto, dated as of December 30, 2003 (previously filed as Exhibit 10.3 to the Registrant's Registration Statement on Form S-1, as amended (Registration No. 333-141952) and incorporated herein by reference).
	10.3	+	Amended and Restated 2000 Stock Option Plan and forms of agreements thereunder (previously filed as Exhibit 10.4 to the Registrant's Registration Statement on Form S-1, as amended (Registration No. 333-141952) and incorporated herein by reference).
	10.4	+	2005 Stock Appreciation Rights Plan and form of agreements thereunder (previously filed as Exhibit 10.5 to the Registrant's Registration Statement on Form S-1, as amended (Registration No. 333-141952) and incorporated herein by reference).
	10.5	†	Material Service Provider Agreement by and between the Registrant and JPMorgan Chase Bank, N.A., dated as of December 6, 2004, as amended (previously filed as Exhibit 10.6 to the Registrant's Registration Statement on Form S-1, as amended (Registration No. 333-141952) and incorporated herein by reference).
	10.6	*	Amendment No. 236169, dated as of March 1, 2008 to the Master Service Provider Agreement by and between the Registrant and JPMorgan Chase Bank, N.A.
	10.7	*†	Amendment No. 3, dated as of January 1, 2009 to the Master Service Provider Agreement by and between the Registrant and JPMorgan Chase Bank, N.A.
	10.8	+	Form of Indemnification Agreement between the Registrant and each of its directors (previously filed as Exhibit 10.7 to the Registrant's Registration Statement on Form S-1, as amended (Registration No. 333-141952) and incorporated herein by reference).
	10.9	†	Provision of IT Services for BT Contract by and between the Registrant and British Telecommunications plc, dated as of March 29, 2007, as amended by Amendment numbers 1-4 (previously filed as Exhibit 10.7 to the Registrant's Annual Report on Form 10-K, filed June 3, 2008, and incorporated herein by reference).

110

Exhibit No.			Exhibit Title
	10.10	*†	Amendment No. 5 to the BT Contract by and between Registrant and British Telecommunications plc, dated as of March 31, 2009.
	10.11	*†	Master Services Agreement between the Registrant and Metavante Corporation dated as of March 23, 2004, as amended by Nos. 1-6.
	10.12		Amended and Restated Credit Agreement between Registrant and Citizens Bank of Massachusetts, dated as of September 29, 2006, as amended by Amendment Nos. 1-4 thereto, including Amended and Restated Revolving Credit Note, Amended and Restated Security Agreement, Negative Pledge Agreement and Stock Pledge Agreement, each dated as of September 29, 2006 (previously filed as Exhibit 10.8 to the Registrant's Annual Report on Form 10-K, filed June 3, 2008, and incorporated herein by reference).
	10.13		Fifth Amendment to Amended and Restated Credit Agreement between Registrant and Citizens Bank of Massachusetts, dated as of July 30, 2008 (previously filed as Exhibit 10.2 to the Registrant's Quarterly Report on Form 10-Q, filed August 1, 2008, and incorporated herein by reference).
	10.14	*	Sixth Amendment to Amended and Restated Credit Agreement between Registrant and Citizens Bank of Massachusetts, dated as of March 31, 2009.
	10.15	+	Executive Agreement between the Registrant and Kris Canekeratne, dated as of April 5, 2007 (previously filed as Exhibit 10.10 to the Registrant's Registration Statement on Form S-1, as amended (Registration No. 333-141952) and incorporated herein by reference).
	10.16	+	Executive Agreement between the Registrant and Danford F. Smith, dated as of April 5, 2007 (previously filed as Exhibit 10.11 to the Registrant's Registration Statement on Form S-1, as amended (Registration No. 333-141952) and incorporated herein by reference).
	10.17	+	Executive Agreement between the Registrant and Thomas R. Holler, dated as of April 5, 2007 (previously filed as Exhibit 10.12 to the Registrant's Registration Statement on Form S-1, as amended (Registration No. 333-141952) and incorporated herein by reference).
	10.18	+	Executive Agreement between the Registrant and Roger Keith Modder, dated as of April 5, 2007 (previously filed as Exhibit 10.13 to the Registrant's Registration Statement on Form S-1, as amended (Registration No. 333-141952) and incorporated herein by reference).
	10.19	+	Executive Agreement between the Registrant and T.N. Hari, dated as of April 5, 2007 (previously filed as Exhibit 10.14 to the Registrant's Registration Statement on Form S-1, as amended (Registration No. 333-141952) and incorporated herein by reference).
	10.20	+	Offer Letter by and between Ranjan Kalia and Registrant dated as of April 16, 2008 (previously filed as Exhibit 10.3 to the Registrant's Quarterly Report on Form 10-Q, filed October 31, 2008, and incorporated herein by reference).
	10.21	+	FY2009 Bonus Plan by and between Raj Rajgopal and Registrant for the fiscal year ending March 31, 2009(previously filed as Exhibit 10.4 to the Registrant's Quarterly Report on Form 10-Q, filed October 31, 2008, and incorporated herein by reference).
	10.22	+	Separation Agreement between the Registrant and Mr. Danford Smith dated as of August 28, 2008 (previously filed as Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed August 29, 2008, and incorporated herein by reference).

111

Exhibit No.			Exhibit Title
	10.23		Co-Developer Agreement and Lease Deed between the Registrant and APIICL, a state government agency in India, dated as of March 2007 (previously filed as Exhibit 10.15 to the Registrant's Registration Statement on Form S-1, as amended (Registration No. 333-141952) and incorporated herein by reference).
	10.24	+	2007 Stock Option and Incentive Plan, including Form of Incentive Stock Option Agreement, Form of Non-Qualified Stock Option Agreement for Company Employees, Form of Non-Qualified Stock Option Agreement for Non-Employee Directors, and Form of Employee Restricted Stock Agreement (previously filed as Exhibit 10.15 to the Registrant's Annual Report on Form 10-K, filed June 3, 2008, and incorporated herein by reference).
	10.25		Fifth Amended and Restated Stockholders Agreement by and among the Registrant and the Stockholders named therein, dated as of March 29, 2007 (previously filed as Exhibit 10.17 to the Registrant's Registration Statement on Form S-1, as amended (Registration No. 333-141952) and incorporated herein by reference).
	10.26		Agreement for Civil and Structural Works, including the General Conditions of the Contract by and between Virtusa (India) Private Limited and Shapoorji Pallionji & Company Limited, dated as of July 2, 2007 (previously filed as Exhibit 10.18 to the Registrant's Registration Statement on Form S-1, as amended (Registration No. 333-141952) and incorporated herein by reference).
	10.27	+	FY 2007 Executive Variable Incentive Cash Compensation Program (previously filed as Exhibit 10.19 to the Registrant's Registration Statement on Form S-1, as amended (Registration No. 333-141952) and incorporated herein by reference).
	10.28	+	Non-Employee Director Compensation Policy (previously filed as Exhibit 10.20 to the Registrant's Registration Statement on Form S-1, as amended (Registration No. 333-141952) and incorporated herein by reference).
	10.29	+	FY2008 Virtusa Corporation Variable Cash Compensation Plan (previously filed as Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q, filed September 7, 2007, and incorporated herein by reference).
	10.30	+	FY2009 Virtusa Corporation Executive Variable Cash Compensation Plan (previously filed as Exhibit 10.2 to the Registrant's Quarterly Report on Form 10-Q, filed October 31, 2008, and incorporated herein by reference).
	10.31		Lease Deed by and between DLF Assets Private Limited and Virtusa Software Services Pvt. Ltd. dated as of July 21, 2008 (previously filed as Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q, filed August 1, 2008, and incorporated herein by reference).
	10.32		LEASE DEED by and between Andhra Pradesh Industrial Infrastructure Corporation Limited and Virtusa (India) Private Limited dated as of August 22, 2007 previously filed as Exhibit 10.2 to the Registrant's Quarterly Report on Form 10-Q, filed September 7, 2007, and incorporated herein by reference).
	21.1		Subsidiaries of Registrant (previously filed as Exhibit 21.1 to the Registrant's Annual Report on Form 10-K, filed June 3, 2008, and incorporated herein by reference).
	23.1	*	Consent of KPMG LLP
	24.1	*	Power of Attorney (included on signature page)

112

Exhibit No.			Exhibit Title
	31.1	*	Certification of principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	31.2	*	Certification of principal accounting and financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	32.1	**	Certification of principal executive officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. 1350
	32.2	**	Certification of principal accounting and financial officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. 1350

+

Indicates a management contract or compensation plan, contract or arrangement.

†

Confidential treatment has been requested for certain provisions of this Exhibit.

*

Filed herewith.

**

Furnished herewith. This certification shall not be deemed filed for any purpose, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act of 1933, amended or the Exchange Act of 1934, as amended.

113

EX-10.6

Exhibit 10.6

Amendment JPMC No: CW236169

Master Agreement JPMC No: 707575

Amendment No. 236169
To
The Master Service Provider Agreement between
Virtusa Corporation
and JPMorgan Chase Bank, N.A.
dated as of December 6, 2004

JPMC Agreement No. 70575

This Amendment No. 236169 (“Amendment”) to the Master Service Provider Agreement, dated as of December 6, 2004 and entered into by JPMorgan Chase Bank and Virtusa Corporation, (the “Agreement”) is made and entered into as of March 1, 2008 (“Amendment Effective Date”) by JPMorgan Chase Bank, National Association, as successor in interest to JPMorgan Chase Bank, (“JPMC”), with an office located at 270 Park Avenue, New York, New York 10017-2070, and Virtusa Corporation (“US Supplier”) with offices located at 2000 West Park Drive, Westborough, MA 01581 and Virtusa Corporation (“Offshore Supplier”, together with “US Supplier”, collectively “Supplier”) with offices located at Virtusa (India) Pvt. Ltd., 3 rd Floor, White House, Begumpet, Kundanbagh, Hyderbad India 500016.

WHEREAS, JPMC and Supplier have entered into the Agreement, and

WHEREAS, JPMC and Supplier have previously amended the Agreement as follows: Amendment 70575-A1 with an Effective Date of March 30, 2005 and 70575-A2, with an Effective Date of May 12, 2005. The Agreement as amended by the Prior Amendments is referred to as (the “Agreement”), and

WHEREAS, section 2.4 of the Agreement entitled “Country Specific Legal and Regulatory Requirements” provides in sub section (b) that, “Upon JPMC’s written request, Supplier agrees to include such provisions in Master Agreement Exhibit H European Union Privacy Addendum of the Agreement (and vary the Agreement accordingly), or in a separate agreement between JPMC and Supplier; provided, however that to the extent such provisions require a change in the Services, the change order procedures set forth in section 2.6 (Change Orders) shall apply to such change in the Services.”, and

WHEREAS, JPMC and Supplier agree that the following Asia Pacific Privacy Clauses are such country specific legal and regulatory requirements, and

WHEREAS, JPMC and Supplier now wish to further amend the Agreement as set forth herein.

NOW, THEREFORE, in consideration of the foregoing premises and the promises, terms and conditions set forth below and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows.

1.Capitalized terms used in this Amendment and not otherwise defined herein shall have the meanings set forth in the Agreement

1

ASIA PACIFIC PRIVACY CLAUSES

A.OPERATIVE PROVISIONS

1.Definitions

“JPMC” shall mean JPMorgan Chase Bank, National Association.

“Personal Information” shall mean information or an opinion (including information or an opinion forming part of a data base), whether true or not, and whether recorded in a material form or not, about an individual whose identity is apparent, or can reasonably be ascertained, from the information or opinion.

“Privacy Act” shall mean the following: (1) the National Privacy Principles set out in Schedule 3 of the Privacy Act of 1988 of Australia; (2) the Personal Data (Privacy) Ordinance of 1996 of Hong Kong; (3) the Personal Information Protection Act (Kojin Joho no Hogo ni Kansuru Houritsu, Law No. 57 of 2003) of Japan; and (4) the Computer-Processed Personal Data Protection Law (Amended 1995 . 08 . 11) of Taiwan; and (5) the Privacy Act 1993 of New Zealand, each legislation as amended from time to time; and (6) any future Privacy act promulgated by a jurisdiction in which JPMC has customer’s whose information will be accessed by the Service Provider. Parties acknowledge that the Computer-Processed Personal Data Protection Law (Amended 1995.08.11) of Taiwan is currently being revised by the relevant governmental authority and such revisions, once adopted as part of the Privacy Laws of Taiwan, shall be encompassed within the compliance obligations as defined above.

“Regulated Information” shall mean Personal Information which the Service Provider accesses and/or collects from JPMC (whether directly or incidentally) in connection with, or in performance of, (1) prior Amendments and (2) the Agreement.

“Service Provider” shall mean Supplier and/or one or more of its Affiliates.

2.Rules for Interpreting this Amendment

(a)A reference to:

(i)legislation (including subordinate legislation) is to that legislation as amended, re-enacted or replaced, and includes any subordinate legislation issued under it.

(ii)a party to this Amendment or to any other document or agreement includes a permitted substitute or a permitted assign or that party; and

(iii)a person includes any type of entity or body of persons, whether or not it is incorporated or has a separate legal identity, and any extractor, administrator or successor in law of the person

2

3.Multiple Parts

If a party to this Amendment is made up of more than one person, or a term is used in this Amendment to refer to more than one party;

(a)an obligation of those persons is joint and several;

(b)a right of those persons is held by each of them severally; and

(c)any reference to that party or that term is a reference to each of those persons separately, so that (for example) a representation, warranty or undertaking is given by each of them separately.

B.PRIVACY

1.Compliance with the Privacy Act

(a)The Service Provider will at all times comply with the Privacy Act and agrees to do so even if the Service Provider is exempt from the application of the Privacy Act as a “small business operator” within the meaning of that term under the Privacy Act.

(b)The Service Provider agrees to undertake such training and to implement such procedures as may be reasonably required by JPMC in respect of the Privacy Act.

2.Confidentiality of JPMC’s Customer Information

(a)The Service Provider agrees to treat Regulated Information as confidential to JPMC and belonging to JPMC. The Service Provider agrees that it owes an obligation of confidence to JPMC in relation to Regulated Information.

(b)The Service Provider will not disclose Regulated Information to any third party except for the purposes of the agreement, or as required by law.

(c)Service Provider will keep Regulated Information secure against theft, loss, damage and unauthorized access, use and disclosure. If the Service Provider becomes aware of any such event, the Service Provider agrees to notify JPMC immediately in writing of that event.

(d)The Service Provider agrees, immediately upon termination of this Amendment, or upon the earlier request of JPMC, at JPMC’s option, to return, destroy or de-identify the Regulated Information. If Service Provider elects to destroy the Regulated Information, then Service Provider shall evidence proof of the destruction of such Regulated Information to JPMC in the form of a Certificate of Destruction within 10 days of the date of the destruction of such Regulated Information.

3.Indemnity

(a)The Service Provider unconditionally indemnifies JPMC against any loss, liability or expense that JPMC may suffer, directly or indirectly, because the Service Provider breaches any of its obligations under this clause B (Privacy).

3

(b)The Service Provider acknowledges that any breach or threatened breach of this clause B by the Service Provider may cause JPMC immediate and irreparable harm for which damages alone may not be an adequate remedy. The Service Provider agrees that JPMC may commence proceedings to restrain any breach or threatened breach of the terms of this clause B.

4.Survival

Clause B(2) (Confidentiality of JPMC’s Customer Information) and B(3) (Indemnity) shall continue to have effect after the termination or the expiration of this Amendment.

C.GENERAL

1.Governing Law

(a)This Amendment and any action arising hereunder shall be governed by the laws of the State of New York.

(b)Each party submits to the non-exclusive jurisdiction of the courts exercising jurisdiction in the State of New York, and any court that may hear appeals from any of those courts, for any proceedings in connection with this Amendment, and waives any right it might have to claim that those courts are an inconvenient forum.

2.Giving Effect to this Amendment

Each party must do anything (including execute any document), and must ensure that its employees and agents do anything (including execute any document), that another party may reasonably require to give full effect to this Amendment.

3.Counterparts

This Amendment may be executed by one or more of the parties to this Amendment on any number of separate counterparts and all of said counterparts taken together shall be deemed to constitute one and the same instrument.

4.Attorneys

Each person who executes this Amendment on behalf of a party under a power of attorney declares that he or she is not aware of any fact or circumstance that might affect his or her authority to do so under that power of attorney.

2.Except as expressly amended herein, the Agreement shall remain in full force and effect.

3.Terms not defined herein shall be as defined in the Agreement.

4.By executing this Amendment, the parties hereto ratify and confirm the terms of the Agreement, as modified by the terms of this Amendment.

5.If there shall be any conflict in the terms and conditions of the Agreement and the terms and conditions of this Amendment, the terms and conditions of this Amendment shall control and be binding.

4

6.All references in the Agreement in and/or to this “this Amendment” and words of a like nature shall be deemed to refer to the Agreement, as amended and supplemented by this Amendment.

IN WITNESS WHEREOF,JPMC and Supplier have caused duly authorized representatives of their respective companies to execute this Amendment as of the Amendment Effective Date.

JPMORGAN CHASE BANK,			VIRTUSA CORPORATION
NATIONAL ASSOCIATION
By:	/s/ Daniel Cochran		By:	/s/ Dan Smith
Printed Name:		Daniel Cochran	Printed Name:		Dan Smith
Title:	Vice President		Title:	COO
Date:	2/14/08		Date:	2/11/08

LEGAL

MRS

INITIALS

02/06/08

DATE

5

EX-10.7

Exhibit 10.7

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934 (“SECURITIES EXCHANGE ACT”); [***] DENOTES OMISSIONS.

Contract ID No. CW279539

Amendment #3

To Master Service Provider Agreement

(Contract ID No. JPMC 70575)

This Amendment (“Amendment”) to the Master Service Provider Agreement, dated December 6, 2004, as amended (the “Agreement”) is made and entered into as of the 1st day of January, 2009  (“Amendment Effective Date”) among JPMorgan Chase Bank, National Association (“JPMC”), with an office located at 270 Park Avenue, New York, New York, 10017 and Virtusa Corporation located at 2000 West park Drive, Westborough, MA 01581 (“US Supplier”) and Virtusa India Pvt. Ltd., 3rd Floor, My Home Tycoon, Begumpet, Hyderabad 500-016, India (“Offshore Supplier”).

WHEREAS, JPMC and Supplier have entered into the Agreement, as amended, and

WHEREAS, JPMC and Supplier now wish to further amend the Agreement as set forth herein.

NOW, THEREFORE, in consideration of the foregoing premises and the promises, terms and conditions set forth below and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows.

1.             To amend the Exhibit G to the Agreement as follows

(a)The Title of Exhibit G is hereby amended and restated to be “Pricing and Rate Card”

(b) The pricing below, including the associated terms (collectively, the “Rate Card), is effective January 1, 2009 for all new and existing time and material engagements between the parties hereto.  JPMC reserves the right to review and adjust said Rate Card periodically (the frequency and results of such a review will be based upon supply, demand and/or other internal/external economic forces, but in no such case shall such review be less than annually.

1

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT; [***] DENOTES OMISSIONS.

Contract ID No. CW279539

[***]

2

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT; [***] DENOTES OMISSIONS.

Contract ID No. CW279539

2.             Except as expressly amended herein, the Agreement remains in full force and effect.

3.             Terms not defined herein shall be as defined in the Agreement.

4.             By executing this Amendment, the parties hereto ratify and confirm the terms of the Agreement, as modified by the terms of this Amendment.

5.             This Amendment may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original and all of which shall constitute the same instrument.

6.             If there shall be any conflict in the terms and conditions of the Agreement and the terms and conditions of this Amendment, the terms and conditions of this Amendment shall control and be binding.

7.             All references in the Agreement in and/or to “this Agreement” and words of a like nature shall be deemed to refer to the Agreement, as amended and supplemented by this Amendment.

[********************************************************************************************* ***************************************************************************************************** ******************************]

IN WITNESS WHEREOF, JPMC and Supplier have caused duly authorized representatives of their respective companies to execute this Amendment as of the Amendment Effective Date.

JPMORGAN CHASE BANK,					VIRTUSA CORPORATION
NATIONAL ASSOCIATION
By:	/s/ Shashank Modak				By:	/s/ Ranjan Kalia
Printed Name:				Shashank Modak	Printed Name:					Ranjan Kalia
			Managing Director
Title:			Sourcing and Procurement Svcs		Title: CFO
Date:		April 14, 2009			Date:			5/21/09
					VIRTUSA INDIA PVT. LTD.
					By:		/s/ Keith Modder
					Printed Name:						K. Modder
					Title:				President - Asia Ops.
					Date:			25 May 2009

3

EX-10.10

Exhibit 10.10

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT; [***] DENOTES OMISSIONS.

FIFTH AMENDMENT TO CONTRACT #678650 FOR THE

PROVISION OF IT SERVICES TO BT

VIRTUSA CORPORATION AND BRITISH TELECOMMUNICATIONS

This Fifth Amendment (“Amendment”) to the CONTRACT for the Provision of IT Services to BT entered into on March 29, 2007, as amended (contract number “678650”) (“Agreement”) by and between British Telecommunications plc (“BT”) and Virtusa UK Limited (“Virtusa”) is effective this 20th day of March, 2009.

WHEREAS the parties entered into the Agreement; and

WHEREAS the parties wish to amend the Agreement;

NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

1.All defined terms, unless otherwise defined in this Amendment, shall have the meanings given them in the Agreement.

2To correct a typographical error, the Discount Table in Section 1.7.2 of the Agreement is hereby deleted and replaced with the following:

[***]

2.With respect to Amendment Number 3 to the Agreement dated as of March 31, 2008, the following is added as a new Section 5.(b)(vi) thereof:

[********************************************************************************************* ********************************************************************************************* ********************************************************************************************* ********************************************************************************************* ********************************************************************************************* ********************************************************************************************* ********************************************************************************************* ********************************************************************************************* ************************]

1

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT; [***] DENOTES OMISSIONS.

3.Except as specifically modified or amended by this Amendment, the terms and conditions of the Agreement shall remain in full force and effect.

IN WITNESS WHEREOF, the parties have executed this Amendment by their duly authorized representatives as of the day and year below.

British Telecommunications plc	Virtusa UK Limited
/s/ Abbi Hewett	/s/ Kim Bak
Signature	Signature
Abbi Hewett	Kim Bak
Name	Name
Senior Buyer	European Corporate Controller
Title	Title
31/03/09	31/3/09
Date	Date

2

EX-10.11

Exhibit 10.11

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT; [***] DENOTES OMISSIONS.

Virtusa Corporation

MASTER SERVICES AGREEMENT

THIS MASTER SERVICES AGREEMENT (the “Agreement”) is made as of February, 2004 (the “Effective Date”), by and between Virtusa Corporation, a Delaware corporation with offices at 2000 West Park Drive, Westborough, MA 01581 (“Virtusa”) and Metavante Corporation, a Wisconsin corporation with its primary place of business at   4900 West Brown Deer Road, Brown Deer WI 53223 (“Metavante”).

Metavante wishes to engage Virtusa and Virtusa wishes to provide to Metavante the Services (as defined below) and Deliverables (as defined below) as specified in the Work Order(s) (each, a “Work Order”) attached hereto as Exhibit A subject to the terms and conditions of this Agreement.  Capitalized terms used in this Agreement shall have the meaning set forth in Exhibit B hereto.

In consideration of the mutual promises set forth herein, Virtusa and Metavante hereby agree as follows:

1.SCOPE OF SERVICES

1.1Services and Deliverables. Virtusa agrees, subject to the terms and conditions of this Agreement, to provide Metavante with the Services and Deliverables as specified in any Work Order executed by both parties.  In the event of any conflict between the terms of this Agreement and the terms of a WORK ORDER, the terms of this Agreement shall control, unless otherwise specified in the WORK ORDER under the heading “Special Terms.”  Deliverables shall be subject to acceptance testing if, and as, set forth in the applicable Work Order.

1.2Change In Work Order. Virtusa agrees that Metavante, under certain circumstances, may elect to (i) amend, modify or change the Services and/or Deliverables specified in the Work Order or (ii) change the way such Services are billed pursuant to the Work Order (i.e. Retainer, Time and Material, or Fixed Price basis) subject to compliance with the following procedures:

(i)  Submission of Request.  Metavante shall submit all such requests in writing to Virtusa (hereinafter “Request”).

(ii)  Virtusa Response.  Virtusa will evaluate each Request within ten (10) business days following Virtusa’s receipt of the Request. If Virtusa determines in its best business judgment that it cannot accept the Request, Virtusa will provide a written response to Metavante within ten (10) business days of such determination.  If Metavante’s Request is acceptable, Virtusa will provide Metavante a written proposal (“Proposal”) in the form of either an addendum to the related Work Order and/or a new Work Order, as appropriate. The Proposal will include, but not be limited to, a statement of the availability of Virtusa’s personnel and resources and the cost and schedule impact, if any. If Metavante elects to authorize Virtusa’s Proposal, Metavante will, as soon as possible,

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but not later than ten (10) business days after receipt of the Proposal, return a duly signed copy of the Proposal to Virtusa.

(iii)  Performance.  Upon receipt of the signed original unaltered Proposal, Virtusa will commence performance in accordance with such Proposal, which will be deemed to be an addendum to the related Work Order and/or a new Work Order, as the case may be.

1.3  Service Locations.

(i)  Service Locations.  The Services shall be provided to Metavante (1) from the Metavante Service Locations, (2) from the Virtusa Service Locations and (3) from any other location for which Virtusa has received Metavante’s written approval, to be given in Metavante’s sole discretion (collectively, the “Service Locations”).  Virtusa and Virtusa Agents may not provide or market services to a third party from a Metavante Service Location without Metavante’s consent.

(ii)  Safety and Security Procedures.  Virtusa shall maintain and enforce at the Virtusa Service Locations safety and security procedures that are at least equal to the most stringent of the following:  (1) industry standards for locations similar to the Virtusa Service Locations; (2) the procedures in effect at other Virtusa Service Locations; and (3) any higher standard otherwise agreed upon in writing by the Parties.

(iii)  Data Security.  Virtusa shall establish and maintain safeguards against the destruction, loss or alteration of Metavante Data in the possession of Virtusa on the terms set forth in the Virtusa Information Systems Security Policy Manual Version 1.0 (the “Data Security Policy”) and previously provided to Metavante.  In the event Virtusa intends to implement a material modification or change to the Data Security Policy, Virtusa shall notify Metavante, provided that Virtusa shall not modify or change the Data Security Policy in a manner that would have a material adverse affect on the security or protection of Metavante Data.  In the event Virtusa or Virtusa Agents discovers or is notified of a breach or potential breach of security relating to Metavante Data, Virtusa shall immediately (1) notify the Metavante Contract Manager of such breach or potential breach and (2) if the applicable Metavante Data was in the possession of Virtusa or Virtusa Agents at the time of such breach or potential breach, Virtusa shall (a) investigate and remediate the effects of the breach or potential breach and (b) provide Metavante with assurance satisfactory to Metavante that such breach or potential breach will not recur.

(iv)  Security Relating to Competitors.  In the event that (1) Virtusa intends to provide the Services from a Service Location (a) that Virtusa shares with a third party or third parties (other than Virtusa Agents providing Services under this Agreement) or (b) from which Virtusa provides services to any competitor of Metavante or (2) any part of the business of Virtusa is now or in the future competitive with Metavante’s business, then, prior to providing any of the Services from such a Service Location, Virtusa shall use all reasonable commercial efforts to restrict access in any such shared environment to Metavante’s Confidential Information by taking such actions as are required, including without limitation, enforcing the Data Security Policy, so that Virtusa’s employees or Virtusa Agents providing services to such competitive business are restricted from having access to Metavante’s Confidential Information.

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1.4  Audits.

(i)  Annual Third Party Audit.  Virtusa shall provide Metavante annually with a vulnerability assessment with respect to the Virtusa Service Locations substantially in the form of Virtusa’s Report on Information System Review dated May 2003 and previously provided to Metavante.

(ii)  Upon at least 10 business days written notice from Metavante, Virtusa and Virtusa Agents shall provide Metavante, Metavante Agents (all of whom shall be caused by Metavante to be bound by a confidentiality agreement on terms no less restrictive than the terms herein), and/or any of Metavante’s regulators with reasonable access to and any reasonable assistance that they may require with respect to the Service Locations for the purpose of performing audits or inspections of the Services and the business of Metavante relating to the Services.  Such audits shall be conducted by Metavante or Metavante Agents only during regular business hours at any Virtusa office or location and shall be limited to no more than once per annum.  If any audit by an auditor designated by Metavante, a Metavante Agent or a regulatory authority results in Virtusa being notified that Virtusa or Virtusa Agents are not in compliance with any Law or term of this Agreement, Virtusa shall, and shall cause Virtusa Agents to, promptly take actions to comply with such Law or term.  Virtusa shall bear the expense of any such response.

1.5  Virtusa Contract Manager.

(i)  Virtusa shall appoint an individual (the “Virtusa Contract Manager”) who, from the date of this Agreement shall serve as the primary Virtusa representative under this Agreement.  The Virtusa Contract Manager shall (1)have overall responsibility for managing and coordinating the performance of Virtusa’s obligations under this Agreement and (2) be authorized to act for and on behalf of Virtusa with respect to the performance of this Agreement.

(ii)  If Metavante reasonably determines that the Virtusa Contract Manager should not continue in that position, then Metavante may, upon written notice as provided to Virtusa with reasonable grounds as to why the Virtusa Contract Manager should be replaced, require removal of such Virtusa Contract Manager.  Virtusa shall, as soon as reasonably practicable, replace such Virtusa Contract Manager.

(iii)  Virtusa shall maintain backup procedures and conduct the replacement procedures for the Virtusa Contract Manager in such a manner so as to assure an orderly succession for Virtusa Contract Manager who is replaced.  Upon request, after a determination that any Virtusa Contract Manager will be replaced, Virtusa shall make such procedures available to Metavante.

1.6Project Staff.  Virtusa shall appoint individuals with suitable training and skills to perform the Services to the Project Staff.  Virtusa shall provide Metavante with a list of all Virtusa personnel dedicated full-time to the Project Staff at the end of every ninety (90)-day period after the Effective Date.  Except as otherwise approved by Metavante (in its sole discretion), those Virtusa personnel located on Metavante’s premises may only provide services on such premises which support Metavante’s operations.  Virtusa shall notify Metavante as soon

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as possible after dismissing or reassigning any member of the Project Staff whose normal work location is at a Metavante Service Location.

1.7  Subcontractors.

(i)  Prior to subcontracting any of the Services, Virtusa shall notify Metavante of the proposed subcontract and shall obtain Metavante’s approval of such subcontract.  Prior to amending, modifying or otherwise supplementing any subcontract relating to the Services, Virtusa shall notify Metavante of the proposed amendment, modification or supplement and shall obtain Metavante’s approval thereof which approval shall not be unreasonably withheld or delayed.

(ii)  No subcontracting shall release Virtusa from its responsibility for its obligations under this Agreement.  Virtusa shall be responsible for the work and activities of each of the Virtusa Agents, including compliance with the terms of this Agreement.  Virtusa shall be responsible for all payments to its subcontractors.

(iii)  Except as otherwise provided in this Agreement, Virtusa shall promptly pay for all services, materials, equipment and labor used by Virtusa or its subcontractors in providing the Services and Virtusa shall keep Metavante’s property and premises free of all liens and/or competing claims.

1.8Conduct of Virtusa Personnel.  While at the Metavante Service Locations, Virtusa and Virtusa Agents shall (1) comply with the requests, standard rules and regulations of Metavante regarding safety and health, personal and professional conduct (including adhering to general safety practices or procedures) generally applicable to such Metavante Service Locations and (2) otherwise conduct themselves in a businesslike manner; provided that as a condition to such compliance, Metavante shall have provided Virtusa with the then current copy of the applicable policy, rule or regulation.  Virtusa shall cause the Project Staff to maintain and enforce the confidentiality provisions of this Agreement.  If Metavante notifies Virtusa that a particular member of the Project Staff is not conducting himself or herself in accordance with this Section, Virtusa shall promptly (a) investigate the matter and take appropriate action which may include (i) removing the applicable person from the Project Staff and providing Metavante with prompt notice of such removal and (ii) replacing the applicable person with a similarly qualified individual or (b) take other appropriate disciplinary action to prevent a recurrence.  In the event of multiple violations of this Section by a particular member of the Project Staff, Virtusa shall promptly remove the individual from the Project Staff.

1.9Non-Competition.  Virtusa shall not assign any member of the Restricted Staff (as defined below) to perform any services for any Competitor (as defined below) of Metavante which services involve substantially similar or competing products of the Competitor as those being performed under the applicable Work Order without Metavante’s prior written consent, which consent shall not be unreasonably withheld (i) while such member of the Project Staff is actively engaged under a Work Order herein to which the restriction above applies and (ii) for a [****************************** *****************************] is removed from, or ceases to provide services in connection with such Work Order. For purposes of this Agreement, Competitor shall be defined as only those companies listed on the applicable Work Order, as

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agreed to by the parties.  For purposes of this Agreement, “Restricted Staff” shall mean each employee or consultant of Virtusa who (i) is actively engaged for a period of [*********************************************************] and (ii) [***] a [***] of [*****] or below.

1.10  Disaster Recovery.

(i)  Virtusa shall have and maintain a professionally developed disaster recovery plan (“DRP”). Virtusa shall test (and may amend the DRP if Virtusa determines necessary) the operability of the DRP during every 12-month period that the DRP is fully operational, and certify to Metavante at least once during every 12-month period that the DRP is fully operational. Virtusa shall implement the DRP upon the occurrence of a disaster. Virtusa shall use all reasonable commercial efforts to reinstate the Services within [***] after the occurrence of a disaster. In the event of a disaster (as such term is defined in the DRP), Virtusa [*************************************************************************** *******************************], unless agreed to by Metavante in writing.

(ii)  Force Majeure.  If and to the extent that a Party’s performance of any of its obligations (except for payment obligations) pursuant to this Agreement is prevented, hindered or delayed by fire, flood, earthquake, elements of nature or acts of God, acts of war, terrorism, riots, civil disorders, rebellions or revolutions, or any other similar cause beyond the reasonable control of such Party (each, a “Force Majeure Event”), and such non-performance, hindrance or delay was not caused by the negligence of such party, then the non-performing, hindered or delayed Party shall be excused for such non-performance, hindrance or delay, as applicable, of those obligations affected by the Force Majeure Event for as long as such Force Majeure Event continues and such Party continues to use its best efforts to recommence performance whenever and to whatever extent possible without delay, including through the use of alternate sources, workaround plans or other means.  The Party whose performance is prevented, hindered or delayed by a Force Majeure Event shall immediately notify the other Party of the occurrence of the Force Majeure Event and describe in reasonable detail the nature of the Force Majeure Event.  The occurrence of a Force Majeure Event does not excuse, limit or otherwise affect Virtusa’s obligation to provide either normal recovery procedures or any other disaster recovery services described in Section 1.10.

(iii)  Alternate Source.  If the Force Majeure Event continues to materially and adversely prevent, hinder or delay performance of the Services for more than [***************************], then Metavante may terminate this Agreement, in whole or in part, as of a date specified by Metavante in a termination notice to Virtusa.

(iv)  No Payment for Unperformed Services.  Except as provided in Section 1.10(iii), nothing in this Article shall limit Metavante’s obligation to pay any fees; provided, however, that if Virtusa fails to provide the Services in accordance with this Agreement due to the occurrence of a Force Majeure Event, the Fees shall be adjusted in a manner such that Metavante is not responsible for the payment of any Fees for Services that Virtusa fails to provide during the Force Majeure period.

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(v)  Allocation of Resources.  Whenever a Force Majeure Event or a disaster causes Virtusa to allocate limited resources between or among Virtusa’s customers, Virtusa shall provide Metavante [************************** *****************]

1.11  Termination Services

(i)  At the termination of all services under this Agreement and to facilitate an orderly transfer of all responsibility for the co-sourced functions to Metavante, or its designee, Virtusa shall perform Termination Services in accordance with a jointly developed plan for such Termination Services (“Termination Services Plan”) in accordance with the terms set forth herein.

(ii)  Virtusa shall provide Termination Services to Metavante at Metavante’s request in the event of expiration or termination of this Agreement, subject to the terms herein.  Upon Metavante’s prior written notice to Virtusa of (1) Metavante’s decision to not renew the terms of this Agreement and for the Agreement to expire on the terms set forth herein and (2) Metavante’s request for Termination Services, Metavante and Virtusa shall develop and implement a Termination Services Plan [***] to the expiration date of the applicable Work Order.  If Virtusa or Metavante terminates this Agreement prior to its scheduled expiration pursuant to the terms herein, the parties shall develop and implement such Termination Services Plan, commencing on the Termination Date.  The Termination Services Plan shall include the Termination Services to be performed, the respective obligations of the parties, the Metavante and Virtusa resources who will participate in the plan, and inventory of the responsibilities to be transitioned, target completion dates, estimated effort, and exit criteria by which Metavante will confirm that the Termination Services have been completed.

(iii)  Termination Services

Termination services shall mean those activities required to transfer responsibility to Metavante for those tasks and activities that were being performed by Virtusa under this Agreement (“Termination Services”).  Termination Services shall include, but shall not be limited to, the following types of services:

·Reverse Knowledge Transfer:  Virtusa resources will work with the Metavante resources to transition their knowledge of Metavante projects, activities and applications to a Metavante designated resource.  The reverse knowledge transfer will be performed based on the Termination Services Plan.  For the avoidance of doubt, all such services will be limited to knowledge transfer only and all development work and coding of the Virtusa resources shall not be included in any Termination Services.

·Transition of Deliverables:  Virtusa resources will transition responsibility for completed and in-process deliverables to a Metavante designated resource.  If a Metavante resource cannot be identified for this transition, Virtusa resources will document the deliverables in accordance with jointly agreed deliverable transition guidelines.  The transition will be performed based on the Termination Services Plan.

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·Communications:  Virtusa and Metavante shall together keep the [***] and [*****] connections between Metavante and Virtusa work locations operable for the Termination Services Period (defined below).

(iv)  Termination Services Period

Virtusa shall promptly commence providing Termination Services upon (a) non-terminating party’s receipt of the terminating party’s valid notice of termination under this Agreement and (b) Virtusa’s receipt of Metavante’s written request for Termination Services.  Except as otherwise expressly set forth in the Termination Services Plan, Virtusa shall perform Termination Services for a period not to exceed [******] (“Termination Services Period”) commencing on the termination date, unless Metavante directs Virtusa to discontinue providing the Termination Services prior to the end of such Termination Services Period.  Unless otherwise agreed in writing by the parties, the parties’ rights and obligations regarding Termination Services shall survive the expiration or termination of this Agreement.

(v)  Charges for Termination Services

Metavante shall pay Virtusa for Termination Services on a time and materials basis for the Virtusa resources that perform these Termination Services, at a rate mutually agreed upon by the parties [**************** *******************************************************************************] provided that, if Metavante terminates this Agreement pursuant to a material breach by Virtusa which is not cured within 30 days of written notice by Metavante under this Agreement, Virtusa shall provide the Termination Services [******************] provided that no more than [*********************] actively engaged on the Work Order at the time of termination will be required to perform Termination Services [*************] under the terms herein (except that at a minimum, of the Project Staff, Virtusa shall make available at least [************] to assist in the transition, [*************************************] and the [***************] shall be agreed upon by the parties).  Any additional resources or services beyond the [******] Termination Service Period referenced above may be purchased by Metavante [******] at the time of termination.

(vi)  Termination Expenses

If Virtusa  terminates  this Agreement pursuant to a breach by Metavante, Metavante shall  [************************** *******************************************]  from early termination  of this Agreement or any Work Order under this Agreement.  If Metavante terminates this Agreement pursuant to a material breach by Virtusa, Metavante [******* ***************************************************************************************************** ***************************************************************************************************** ************************************] any Work Order under this Agreement [****************************] by Virtusa, in accordance with the terms of this Agreement.

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1.12[***]

(i)  [************************************************************************************************ ***************************************************************************************************** ***************************************************************************************************** ***************************************************************************************************** *****************************************************************************]

(ii)  [************************************************************************************************ ***************************************************************************************************** ***************************************************************************************************** ***************************************************************************************************** ***************************************************************************************************** ***************************************************************************************************** ***************************************************************************************************** ***************************************************************************************************** ***************************************************************************************************** ***************************************************************************************************** ***************************************************************************************************** ***************************************************************************************************** ***************************************************************************************************** ***************************************************************************************************** ********************************************************************************************]

2.PROPRIETARY RIGHTS

2.1Metavante Ownership Rights. Virtusa hereby [*************] to Metavante, all right, title and interest in and to the Deliverables and the Work Product, including without limitation, all copyrights, moral rights, patents, trademarks, trade secrets, and any other intellectual property rights which may be capable of protection under the laws of the United States of America, India or any other country, subject to only to the rights of Virtusa in Virtusa Intellectual Property (as defined in Section 2.2 hereof)and/or any rights of third parties with respect to any third party software delivered with or embedded in any Deliverable which has been disclosed to, and approved by, Metavante in advance. Metavante [********************************] including worldwide ownership of copyright and patent, in and to the Deliverables and Work Product and all copies made from them.  Virtusa acknowledges, and shall cause Virtusa Agents to acknowledge, that Metavante and the successors and permitted assigns of Metavante shall have the right to obtain and hold in their own name any intellectual property rights in and to the Deliverables and the Work Product.  Virtusa agrees to execute, and shall cause Virtusa Agents to execute any documents or take any other actions as may reasonably be necessary, or as Metavante may reasonably request, to perfect Metavante’s ownership of

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any such Deliverables and Work Product, under the laws of the United States, India, and every other country.

2.2Virtusa Ownership Rights. Notwithstanding the foregoing, Virtusa currently owns and shall continue to own all right, title and interest (including without limitation all copyrights, moral rights, patents, trademarks, trade secrets, mask works and any other intellectual property related thereto) in and to all techniques, methodologies, objects, modules, software, or other materials created or obtained by Virtusa prior to performing any Services under this Agreement (“Pre-existing Virtusa Property”), and any and all enhancements, modifications and derivative works to Pre-existing Virtusa Property of general application developed by Virtusa during the term of this Agreement and any Work Order hereunder (“Virtusa Intellectual Property”), excluding any Confidential Information (as defined in Section 3.1 hereof) of Metavante.

2.3Virtusa License. Virtusa hereby grants to Metavante an irrevocable (except as noted in Section 8.4 hereof), perpetual, non-exclusive, non-transferable, non-assignable, royalty-free, fully paid-up, world-wide license to use, copy, modify, sublicense, and display any Virtusa Intellectual Property incorporated into the Deliverables under this Agreement.

2.4Metavante License. For the sole purpose of meeting the requirements and/or obligations of a Work Order, Metavante hereby grants to Virtusa, for the term of this Agreement and any Work Order hereunder, a non-exclusive, non-transferable, non-assignable, royalty-free, fully paid-up, world-wide license to use, copy, modify, display, and create derivative works from all objects, components, software, or other materials/documentation furnished by Metavante to Virtusa which pertain to the Services and/or Deliverables (“Metavante Software”).

2.5Metavante Data.

(i)  Ownership of Metavante Data.  All Metavante Data is, or will be, and shall remain the property of Metavante.  Without Metavante’s approval (in its sole discretion), Metavante Data shall not be, (1) used by Virtusa or Virtusa Agents other than in connection with providing the Services, (2) disclosed, sold, assigned, leased or otherwise provided to third parties by Virtusa or Virtusa Agents or (3) commercially or otherwise exploited by or on behalf of Virtusa or Virtusa Agents.  Virtusa hereby irrevocably assigns, transfers and conveys, and shall cause Virtusa Agents to assign, transfer and convey, to Metavante without further consideration all of its and their right, title and interest in and to Metavante Data.  Upon written request by Metavante, Virtusa shall execute and deliver, and shall cause Virtusa Agents to execute and deliver, any documents that may be reasonably necessary under any Law to preserve, or enable Metavante to enforce, its rights with respect to Metavante Data.

(ii)  Return of Data.

(1)Upon request by Metavante at any time during the Term and upon expiration or termination of this Agreement, Virtusa shall (a) promptly return to Metavante, in the

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format and on the media requested by Metavante, all or any part of Metavante Data and (b) erase or destroy all or any part of Metavante Data in Virtusa’s possession, and certify the same in writing, in each case to the extent so requested by Metavante.

(2)If Virtusa’s compliance with Metavante’s request pursuant to Section 2.5(iii)(1) will have a material adverse effect on Virtusa’s ability to perform the Services as set forth in a Work Order, Virtusa shall notify Metavante of such circumstance prior to complying with such request and the Parties shall agree to an appropriate level of relief of Virtusa.

2.6Residual Information. Notwithstanding anything in this Article 2 to the contrary, either Party may freely use and employ Residual Information, subject to its obligation to protect the other Party’s Confidential Information pursuant to Article 3 of this Agreement.

3.CONFIDENTIALITY

3.1Each Party shall use reasonable measures to protect the other Party’s Confidential Information and shall not disclose any such Confidential Information to any third party except as permitted hereunder.  Such measures shall be as least as stringent as the measures used by the receiving Party to protect its own confidential information, and shall include restricting access to Confidential Information to the recipient’s employees and consultants on a need-to-know basis, and requiring written nondisclosure agreements from such employees and consultants protecting the Confidential Information as required herein.  Each Party shall be responsible for the misappropriation or other misuse or disclosure of the other Party’s Confidential Information by its employees or subcontractors in violation of the terms of this Article 3. A Party may disclose the Confidential Information of the other Party in response to a lawful order or subpoena from any court or any body empowered to issue such an order or subpoena or as otherwise required by law or statute. Each party agrees to notify the other promptly of the receipt of any such order or subpoena or requirement and to provide the other with a copy of such order and, to the extent permitted by law, a reasonable opportunity to obtain a protective order or protect certain parts of the information as being confidential.

3.2The receiving Party is permitted to use the Confidential Information solely for the purposes of performing its obligations hereunder.  Notwithstanding the foregoing, Metavante’s rights to use the Virtusa Intellectual Property shall be as set forth in Section 2.3 hereof. The disclosing Party makes no representations or warranties concerning its Confidential Information, provided that the foregoing shall not apply with respect to any Virtusa Confidential Information that is incorporated into the Deliverables.

3.3Upon request of the disclosing Party, the receiving Party shall return or destroy all Confidential Information, and all copies, extracts, portions, notes, summaries and derivatives of the Confidential Information, in its possession or under its control, provided that the foregoing shall not apply with respect to any Virtusa Intellectual Property that is incorporated into the Deliverables.

3.4Each Party acknowledges that the other Party would suffer irreparable harm if the first party breaches the provisions of this Section 3, and that in the event of such a breach the

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other Party shall be entitled to immediate equitable relief (including without limitation injunction(s) and order(s) for specific performance), in addition to and without limiting its other remedies at law or in equity.

3.5Unauthorized Acts.  Without limiting either Party’s rights in respect of a breach of this Article, each Party shall:

(1)promptly notify the other Party of any unauthorized possession, use or knowledge, or attempt thereof, of the other Party’s Confidential Information by any person or entity that may become known to such Party;

(2)promptly furnish to the other Party full details of the unauthorized possession, use or knowledge, or attempt thereof, and assist the other Party in investigating or preventing the recurrence of any unauthorized possession, use or knowledge, or attempt thereof, of Confidential Information;

(3)cooperate with the other Party in any litigation and investigation against third parties deemed necessary by the other Party to protect its proprietary rights; and

(4)promptly use its best efforts to prevent a recurrence of any such unauthorized possession, use or knowledge, or attempt thereof, of Confidential Information.

Each Party shall bear the cost it incurs as a result of compliance with this Section.

3.6This Article 3 shall survive the termination of this Agreement.

4.FEES AND EXPENSES

4.1Virtusa shall send invoices to Metavante for the fee(s) for Services set forth in the Work Order and any related expenses [*****].  Metavante shall pay Virtusa each such invoice in U.S. Dollars within [***] days of receipt of the applicable invoice.  Each invoice shall be itemized and contain sufficient detail for Metavante to validate services and charges included in the invoice.  Virtusa reserves the right to add a late charge of the [**************************** ************************************************************************************************ **********************************************************************]

4.2All fees are exclusive of all state and local sales or equivalent taxes now in force or enacted in the future.  If such taxes are applicable, and if paid by Virtusa, Metavante will be invoiced as a separate line item on the invoice for those amount(s) that Virtusa may be required to pay.  If a certificate of exemption or similar document is to be provided by Metavante in order to exempt the sale from tax liability, Metavante will obtain and provide an acceptable certificate to Virtusa and the taxing authority.  Each party shall be responsible for payment of all income or equivalent taxes based upon that party’s net income.

4.3Metavante shall reimburse Virtusa for all pre-approved and reasonable travel and living expenses incurred by Virtusa in performing its responsibilities and obligations under this Agreement in addition to the fee(s) for Services set forth in the Work Order.

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4.4If Metavante disputes any charge or amount on any invoice and such dispute cannot be resolved promptly through good-faith discussions between the parties, Metavante shall pay the amounts due under this Agreement minus the disputed amount, and the parties shall diligently proceed to resolve such disputed amount.

4.5Attorneys’ Fees and Costs.  If any legal action is commenced in connection with the enforcement of this Agreement or any instrument or agreement required under this Agreement, the prevailing party shall be entitled to costs, attorneys’ fees actually incurred, and necessary disbursements incurred in connection with such action, as determined by the court.

5.INDEMNIFICATION

5.1  Indemnity by Metavante.  Metavante shall indemnify Virtusa from, and defend and hold Virtusa harmless from and against, any Third Party Claim against Virtusa by any Third Party:

(1)that the Metavante Software infringes upon the proprietary or other rights of any third party (except as may have been caused by a modification by Virtusa or Virtusa Agents);

(2)arising from Metavante’s gross negligence or willful misconduct;

(3)relating to any amounts, including taxes, interest and penalties, assessed against Virtusa which are the obligation of Metavante pursuant to Section 4.2;

(4)relating to personal injury (including death) or property loss or damage resulting from negligence or willful misconduct by Metavante or Metavante Agents;

(5)relating to Metavante’s material breach of Article 3.

5.2Indemnity by Virtusa.  Virtusa shall indemnify Metavante from, and defend and hold Metavante harmless from and against any claim against Metavante by any Third Party:

(1)that the Services, the Deliverables, the Work Product, any enhancements or modifications to the Metavante Software performed by Virtusa or Virtusa Agents or any other resources or items provided to Metavante by Virtusa or Virtusa Agents infringe upon the proprietary or other rights (excluding any third party software approved by Metavante in advance to be delivered with or embedded in any Deliverable or Work Product) of such third party ;

(2)arising out of Virtusa’s gross negligence or willful misconduct or material breach by Virtusa of Section 1.3, Article 2 or Article 3 of this Agreement;

(3)relating to any amounts, including taxes, interest and penalties, assessed against Metavante that are finally determined by a court or similar tribunal to be the obligation of Virtusa (and not due to non-payment or late payment of taxes by Metavante properly due);

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(4)relating to property damage or personal injury resulting from negligence or willful misconduct by Virtusa or Virtusa Agents;

(5)relating to claims by any Virtusa employee or contractor or agent for salary, wages, or payment relating to services performed under any Work Order or under this Agreement;

5.3  Limitations on Indemnity Obligations for Intellectual Property Infringement

5.3.1  Notwithstanding anything to the contrary, if a third party claim of infringement under this Section 5 occurs for which Metavante indemnifies Virtusa under Section 5.1, or if Metavante determines that such a claim is likely to occur, in addition to Metavante’s indemnification obligations stated herein, Metavante shall have the right, in its sole discretion, to either: (i) procure for Virtusa, at Metavante’s expense, the right or license to continue to use the Metavante Software free of the infringement claim; or (ii) replace or modify the Metavante Software; or (iii) require Virtusa to cease using the infringing Metavante Software.

5.3.2  Notwithstanding anything to the contrary, if a third party claim of infringement under this Section 5 occurs for which Virtusa indemnifies Metavante under Section 5.2, or if Virtusa determines that such a claim is likely to occur, Virtusa shall have the right, in its sole discretion, to either: (i) procure for Metavante, at Virtusa’s expense, the right or license to continue to use the Deliverable(s), Work Product or Services free of the infringement claim; or (ii) replace or modify the Deliverable(s), the Work Product or Services to make them non-infringing.  If neither of these remedies are reasonably available to Virtusa, Virtusa may require the Metavante to cease using the infringing Deliverable(s), Work Product or Services and Virtusa will issue Metavante a pro-rated refund of fees paid under the applicable Work Order for the infringing Deliverable based on a 5 year amortization schedule, commencing on the date that the Deliverable was first put in production by Metavante.

5.3.3A party (the “Indemnifying Party”) shall have no obligation to indemnify the other party (the “Indemnified Party”) for any infringement claim based upon: (i) any alteration or modification of any intellectual property not provided or authorized by the Indemnifying Party in writing, if the infringement would not have occurred but for the alteration or modification by a party other than the Indemnifying Party; (ii) use of the intellectual property in combination with other programs or data, unless such programs and/or data were set forth in written specifications, a SOW or acceptance criteria as agreed to by the parties to be used with the Deliverable, Work Product or Service if the infringement would not have occurred but for the use in combination with such programs or data; (iii) use of the intellectual property in a way not provided for or described in the applicable documentation and/or Work Order, if the infringement would not have occurred but for such use; (iv) use of other than a current unaltered version of the intellectual property after the Indemnified Party has been reasonably notified that use of such new release would avoid the infringement and the Indemnifying Party has reasonably provided to the other party such new version free of charge, if the infringement would not have occurred but for the use of other than a current unaltered version of the intellectual property; or (v) the Indemnifying Party’s compliance with the Indemnified Party’s’s designs, specifications or instructions, [********************************************************* ******

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************************************************************] to the extent that the Indemnifying Party could have complied with such designs, specifications, or instructions without infringing upon the rights of the third party.

5.4Indemnification Procedures.

If any third party claim is commenced against a Party entitled to indemnification under Section 5.1 or Section 5.2 (the “Indemnified Party”), written notice thereof shall be given to the Party that is obligated to provide indemnification (the “Indemnifying Party”) as promptly as practicable but in any event no later than 5 business days after receipt or actual knowledge of the claim, whichever is earlier; provided that violation of this notice period by the Indemnified Party shall not relieve the Indemnifying Party of its indemnification obligations under this Section 5 unless and only to the extent that such lack of notice is prejudicial to the Indemnifying Party in any material respect.  If, after such written notice, the Indemnifying Party shall acknowledge that this Agreement applies with respect to such claim, then the Indemnifying Party shall be entitled, if it so elects, in a notice promptly delivered to the Indemnified Party, but in no event less than [***] prior to the date on which a response to such claim is due, to immediately take full control of the defense and investigation of such claim and defend the same, at the Indemnifying Party’s sole cost and expense.  The Indemnified Party shall cooperate, at the cost of the Indemnifying Party, in all reasonable respects with the Indemnifying Party and its attorneys in the investigation, trial and defense of such claim and any appeal arising therefrom; provided, however, that the Indemnified Party may, at its own cost and expense, participate, through its attorneys or otherwise, in such investigation, trial and defense of such claim and any appeal arising therefrom.  No settlement of a claim that involves a remedy other than the payment of money by the Indemnifying Party shall be entered into without the consent of the Indemnified Party.  After notice by the Indemnifying Party to the Indemnified Party of its election to assume full control of the defense of any such claim, the Indemnifying Party shall not be liable to the Indemnified Party for any legal expenses or other related costs, fees, or expenses incurred thereafter by such Indemnified Party in connection with the defense of that claim.  If the Indemnifying Party does not assume full control over the defense of a claim subject to such defense as provided in this Section, the Indemnifying Party may participate in such defense, at its sole cost and expense, and the Indemnified Party shall have the right to defend the claim in such manner as it may deem appropriate, at the cost and expense of the Indemnifying Party.  Subject to the terms of this Section 5, the Indemnifying Party shall will pay all claims, damages, losses, liabilities, fines, penalties, judgments or amounts paid in final settlement (or actions, suits or proceedings, or investigations in respect thereof) and fees, costs and expenses (including all reasonable attorney fees and expenses incurred in connection therewith) at the time such claim is finally awarded against the Indemnified Party to such third party by a court of competent jurisdiction or similar tribunal (or at the time of final settlement thereof) .

5.6The foregoing states each party’s entire liability and obligations and each party’s sole and exclusive remedy for any patent, copyright or other intellectual property infringement claims, or any warranty claim by Metavante under Section 6.2(9) with respect to any of the Deliverables, Work Product or Service under this Agreement.

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6.WARRANTIES

6.1By Metavante.  Metavante represents and warrants that:

(1)Metavante is a corporation duly incorporated validly existing and in good standing under the Laws of Wisconsin;

(2)Metavante has all requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement;

(3)the execution, delivery and performance of this Agreement by Metavante (a) has been duly authorized by Metavante and (b) will not conflict with, result in a breach of or constitute a default under and other agreement to which Metavante is a party or by which Metavante is bound;

(4)Metavante is duly licensed, authorized or qualified to do business and is in good standing in every jurisdiction in which a license, authorization or qualification is required for the ownership or leasing of its assets or the transaction of business of the character transacted by it, except where the failure to be so licensed, authorized or qualified would not have a material adverse effect on Metavante’s ability to fulfill its obligations under this Agreement;

(5)Metavante is in [***] applicable to Metavante and has obtained all applicable [**] and [**] required of Metavante in connection with its obligations under this Agreement;

(6)there is no outstanding [***], [***] or other [***] to which Metavante is [**] which, if decided unfavorably to Metavante, would reasonably be expected to have a material adverse effect on Virtusa’s or Metavante’s ability to fulfill their respective obligations under this Agreement; and

(7)the [**] does not infringe upon the proprietary rights of any third party.

6.2By Virtusa.  Virtusa represents and warrants that:

(1)Virtusa is a corporation duly incorporated, validly existing and in good standing under the Laws of Delaware;

(2)Virtusa has all requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement;

(3)the execution, delivery and performance of this Agreement by Virtusa (a) has been duly authorized by Virtusa and (b) will not conflict with, result in a breach of or constitute a default under and other agreement to which Virtusa is a party or by which Virtusa is bound;

(4)Virtusa is duly licensed, authorized or qualified to do business and is in good standing in every jurisdiction in which a license, authorization or qualification is required for the ownership or leasing of its assets or the transaction of business of the character transacted by it, except where the failure to be so licensed, authorized or qualified would not have a material adverse effect on Virtusa’s ability to fulfill its obligations under this Agreement;

(5)Virtusa is in compliance with all Laws applicable to Virtusa and has obtained all applicable permits and licenses required of Virtusa in connection with its obligations under this Agreement;

(6)there is no outstanding litigation, arbitrated matter or other dispute to which Virtusa is a party which, if decided unfavorably to Virtusa, would reasonably be expected to have a material adverse effect on Metavante’s or Virtusa’s ability to fulfill their respective obligations under this Agreement;

(7)the Services will be performed in accordance with professional standards consistent with generally accepted industry standards.

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(8)the Deliverables as finally delivered to Metavante following acceptance by Metavante, if any, [***************** *****************************] set forth in the applicable Work Order for a [******************************** *************] by Metavante.  The foregoing warranty in this Section shall not apply to: errors in, or non-conformance by, the Deliverable caused by (i) Metavante’s negligence or misuse, (ii) Metavante’s hardware malfunction, or other causes beyond the reasonable control of Virtusa, (iii) third party software not licensed through Virtusa, (iv) the installation of the Deliverable in a hardware or operating environment not expressly stated in the applicable SOW; (v) modification, customization, extension of or damage to the Deliverables (other than as authorized by, or by, Virtusa) or errors in the Deliverable caused in whole or in party by the performance or non-performance of Metavante of its obligations under any Work Order.  In the event of any non-compliance with the foregoing warranty by Virtusa, Metavante shall notify Virtusa in writing and specify the nature of the non-conformance and Virtusa shall have [***] to cure such non-compliance from receipt of such notice.

(9)the Deliverables constitute original works of authorship and shall not infringe upon the proprietary rights of any third party, subject to the terms of in Section 5.2 with respect to infringement;

(10)the Deliverables contain no viruses or similar harmful code at the time first provided to Metavante by Virtusa and Virtusa shall not introduce any viruses or harmful code into Metavante’s software or systems; and

(11)without the consent of Metavante, Virtusa shall not insert into any Software any code that would have the effect of disabling or otherwise shutting down all or any portion of the Software.  Virtusa further represents and warrants that, with respect to any disabling code that may be part of the Software used to provide the Services, Virtusa shall not invoke such disabling code at any time, including upon expiration or termination of this Agreement, without Metavante’s consent.

6.3DISCLAIMER.  EXCEPT AS SPECIFIED IN SECTION 6.1 AND SECTION 6.2, NEITHER METAVANTE NOR VIRTUSA MAKES ANY OTHER WARRANTIES HEREUNDER WITH RESPECT TO ANY MATTER (INCLUDING, WITHOUT LIMITATION, THE SERVICES, THE WORK PRODUCT, THE DELIVERABLES, THE DEVELOPED SOFTWARE OR THE SYSTEMS) AND EACH EXPLICITLY DISCLAIMS ALL OTHER WARRANTIES, WHETHER EXPRESS OR IMPLIED, ORAL OR STATUTORY, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR OR SPECIFIC PURPOSE.

7.LIMITATION OF LIABILITY

7.1LIMITATION OF LIABILITY; DAMAGES.  EXCEPT AS PROVIDED IN SECTION 7.2 BELOW, IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY INDIRECT, INCIDENTAL, SPECIAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES OF ANY NATURE WHATSOEVER, WHETHER IN CONTRACT, WARRANTY OR TORT, INCLUDING WITHOUT LIMITATION, DAMAGES FOR LOSS OF PROFITS, REVENUE, DATA, COVER, LOSS OF OR INTERRUPTION OF BUSINESS OF CUSTOMER OR ANY OTHER PARTY ARISING OUT OF OR IN CONNECTION WITH THE DELIVERY, USE OR PERFORMANCE OF THE SERVICES, THE DELIVERABLES, ANY SOFTWARE OR ANY OTHER

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MATERIALS OR ITEMS EVEN IF THAT PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.  IN NO EVENT SHALL VIRTUSA’S LIABILITY TO CUSTOMER FOR ANY CLAIM ARISING OUT OF THIS AGREEMENT OR ANY WORK ORDER HEREUNDER EXCEED THE AMOUNT ACTUALLY PAID TO VIRTUSA BY CUSTOMER UNDER THE APPLICABLE Work Order FROM WHICH SUCH CLAIM AROSE.

7.2Exclusions.  The limitations or exculpations of liability set forth in Section 7.1 shall not apply to (1) indemnification claims, as set forth in Article 5, (2) breaches of Article 3, (3) material breaches of Article 2, or Section [***], [***], [***] or [***] (5) a Party’s liability under Section 9.3, or (6) a Party’s liability resulting from the gross negligence or intentional acts of the Party, its employees, agents, or subcontractors.

8.TERM AND TERMINATION

8.1This Agreement will become effective as of the Effective Date and will remain in effect for a period of 5 years or until all Services have been completed or terminated as provided herein, whichever occurs later. Metavante may terminate this Agreement for any reason upon [***] written notice to Virtusa.  Virtusa may terminate this Agreement for any reason upon [***] written notice to Metavante; provided that no active Work Order is in effect.  Termination of this Agreement will not result in automatic termination of a Work Order, unless this Agreement is (i) terminated by Metavante, or (ii) terminated for material breach, in which cases a Work Order shall be terminated if the terminating party specifically requests that the Work Order be terminated or the parties mutually agree that any outstanding Work Order(s) will be coterminated with the Agreement.

8.2Either party may terminate this Agreement and/or a Work Order, immediately upon notice to the other party, if the other party breaches any material obligation under this Agreement (it being understood and agreed that any failure to make timely payments to Virtusa shall be deemed a breach of a material obligation by Metavante), and such party fails to cure the breach within [*****] after written notice to cure.

8.3Either party may terminate this Agreement (including all Work Orders) immediately by written notice to the other if the other party becomes insolvent, makes a general assignment for the benefit of creditors, suffers or permits the appointment of a receiver for its business or assets, or becomes subject to any proceedings under any bankruptcy or insolvency law, whether domestic or foreign, or is liquidated, voluntarily or otherwise.

8.4Upon termination of this Agreement and/or any Work Order, each party shall return to the other or destroy all Confidential Information of the other party other than the Virtusa Intellectual Property to which Metavante holds license rights under Section 2.3 of this Agreement (unless the Agreement or Work Order was terminated pursuant to Section 8.2, in which case said license is considered revoked), and except for any Confidential Information of the Metavante required by Virtusa to complete an outstanding Work Order.

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9.INSURANCE.

9.1During the Term, Virtusa shall obtain and maintain at its own expense, insurance of the type and in the amounts set forth below:

(1)statutory workers’ compensation in accordance with all Federal, state and local requirements;

(2)employer’s liability insurance in an amount not less than $1,000,000 per occurrence, covering bodily injury by accident or disease, including death;

(3)commercial general liability (including contractual liability insurance) in an amount not less than $1,000,000; and

(4)comprehensive automobile liability covering all vehicles that Virtusa owns, hires or leases in an amount not less than $1,000,000 (combined single limit for bodily injury and property damage).

(5)  Errors and Omissions insurance covering the Virtusa for loss or damage arising out of negligent acts or errors or omissions which arise from providing Services under this Agreement with limits of not less than $2,000,000.

(6)  Crime insurance, including Employee Dishonesty and Computer Fraud coverage for theft of money or securities that Virtusa holds, or for which Virtusa is legally liable, arising out of dishonest acts committed by the employees of Virtusa or its subcontractors, acting alone or in collusion with others, or through the use of Virtusa’s computer system to fraudulently cause a transfer, with coverage in a minimum amount of $500,000 and an Excess Liability policy (umbrella form) of not less than five million dollars ($5,000,000).

9.2Insurance Documentation.  To the extent third party insurance is obtained or maintained pursuant to Section 9.1, Virtusa shall, upon Metavante’s request, furnish to Metavante certificates of insurance or other appropriate documentation (including evidence of renewal of insurance) evidencing all coverages referenced in Section 9.1 and, if and to the extent applicable, naming Metavante as an additional insured.  Such certificates or other documentation shall include a provision whereby 30 days’ notice must be received by Metavante prior to coverage cancellation or material alteration of the coverage by either Virtusa or Virtusa Agents or the applicable insurer. Such cancellation or material alteration shall not relieve Virtusa of its continuing obligation to maintain insurance coverage in accordance with this Article.

9.3Risk of Loss.  Virtusa is responsible for the risk of loss or theft of, or damage to, any tangible property (e.g., laptop, hardware) of Metavante at a Virtusa Service Location resulting from Virtusa’s negligence, unless such loss, theft, or damage was caused by the acts or omissions of Metavante or a Metavante Agent.  Metavante is responsible for the risk of loss of, or damage to, any property (e.g., laptop, hardware) of Virtusa at a Metavante Service Location resulting from Metavante’s neglignece, unless such loss or damage was caused by the acts or omissions of Virtusa or a Virtusa Agent.

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10.GENERAL

10.1Dispute Resolution. Any claims or legal actions by one party against the other arising out of the relationship between the parties contemplated herein (whether or not arising under this Agreement) shall be governed by the laws of the State of New York.  The United Nations convention on contracts for the International Sale of Goods shall not apply in any event.

In the event of any controversy or dispute between the parties, the parties shall first attempt, in good faith, to resolve a dispute or controversy, at the written request of either party, through discussions between an authorized senior management representative of each party.

Virtusa acknowledges that the timely and complete performance of its obligations pursuant to this Agreement is critical to the business and operations of Metavante.  Accordingly, in the event of a dispute between Metavante and Virtusa, except with respect to a claim for breach under Section 3 or 10.3, each Party shall continue to so perform its obligations under this Agreement in good faith, including payment obligations, for no less than [***] (during the cure period commencing on the date the breaching party receives written notice from the non-breaching party) during the attempted resolution of such dispute unless and until this Agreement is terminated in accordance with the provisions hereof, unless and except to the extent that such performance is prevented as a direct result of the disputed matter.   Notwithstanding the foregoing, if a dispute is not otherwise resolved within the [***] referenced above, the parties may seek and enforce all rights and remedies under this Agreement and applicable law, including suspension or termination of performance under this Agreement.

10.2Entire Agreement. Unless the parties otherwise agree in writing, this Agreement and the Work Order(s) attached hereto constitute the entire agreement and understandings between the parties with respect to the subject matter hereof, and supersede all previous agreements and oral discussions and understandings between the parties with respect thereto (except for amounts owed Virtusa under any prior services agreement).

10.3Non-Solicitation.  The parties agree that during the term of this Agreement, and for a period of [*****] after termination/expiration of this Agreement, neither party shall directly or indirectly solicit for employment, employ or engage as a consultant/employee any person employed then or [*****] by the other party, except as otherwise provided in this Agreement.

10.4Modification of Agreement.  This Agreement and any Work Order(s) attached hereto may only be modified by a written agreement duly signed by persons authorized to sign agreements on behalf of Metavante and of Virtusa.  Any variance from the terms and conditions of this Agreement or any Work Order(s) attached hereto as referenced in any Metavante purchase order(s) or other written notification(s) from the Metavante will have no legal effect.

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10.5Enforceability; Waiver.  If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.  The failure of either party to enforce rights granted hereunder or to take action against the other party in the event of any beach hereunder shall not be deemed a waiver by that party as to subsequent enforcement of rights or subsequent actions in the event of future breaches.

10.6Marketing; Public Relations.  Virtusa shall not use Metavante’s name, tradenames, service marks, trademarks, or logos without Metavante’s prior written consent; except that [******] as a [***] when [******] on its marketing materials and its published customer lists.

10.7Notices.  Any notices required under this Agreement may be hand delivered or shall be deemed received three (3) business days after mailing as certified mail, return receipt requested, to the following addresses: If to Virtusa: at the address listed on the first page of this Agreement, Attn: President.  If to Metavante: at the address listed on the first page of this Agreement, Attn: President.

10.9Assignment.  Neither this Agreement nor any right or obligation hereunder may be transferred or assigned by either party without the express prior written notification to the other party; this notification includes any assignment made to an affiliate of either party or to an assignee in connection with a merger, acquisition or sale or transfer of all or substantially all of the business, assets or equity of either party, provided that the successor/assignee agrees to be bound by all the terms of this Agreement.

10.10Independent Contractor.  It is expressly understood that Virtusa and Metavante are independent contractors, and that neither has the authority to bind or obligate the other party to any third party or otherwise to act in any way as the representative of the other, unless otherwise expressly agreed to in a writing signed by both parties hereto.  The parties do not intend to form a joint venture or partnership hereby, and no joint venture or partnership is formed hereby.  Metavante acknowledges and agrees that Virtusa is in the business of providing consulting and software development services and that, except as expressly provided in this Agreement, Virtusa is [*****] from developing for itself, or for third parties, any deliverables or /software which are [*****] with those provided hereunder to, or which otherwise exploit Virtusa Intellectual Property, provided Virtusa is not in violation of Section 1.3, Section 1.9, or Article 3 hereof.

10.11Survival. The provisions of Sections 2, 3, 4, 5, 6, 7, and 10 will survive the expiration or earlier termination of this Agreement and/or any Work Order.  All other rights and obligations of the parties shall cease upon termination or expiration of this Agreement.

IN WITNESS WHEREOF, the parties have executed this Agreement by their duly authorized representatives as of the day and year below.

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METAVANTE CORPORATION	VIRTUSA CORPORATION
“Metavante”	“Virtusa”
/s/ David S. Fortney	/s/ Thomas R. Holler
Signature	Signature
David S. Fortney	Thomas R. Holler
Name	Name
Senior Vice President and Division Executive
Electronic Presentment and Payment
Metavante Corporation	CFO
Title	Title
3/4/2004	3/23/04
Date	Date
/s/ Cary M. Serif
Signature
Cary M. Serif
Name
Executive Vice President, eFinance Grp.
Title
Date:

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IN WITNESS WHEREOF, the parties have executed this Agreement by their duly authorized representatives as of the day and year below.

METAVANTE CORPORATION

“Metavante”

/s/ Jamie Geschke

Signature

Jamie Geschke

Name

Sr. Vice President & General Manager

Financial Technologies Solutions/

Customer Relationship Management

Title

Date

/s/ Paul Danola

Signature

Paul Danola

Name

Executive Vice President

Financial Services Group

Title

3/10/04

Date

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Exhibit A

Work Order #

Metavante:

Contract Type:            [ ]  Retainer ; [ ]Time and Material; [ ]Fixed Price (check all that apply)

Effective Date:

Term:

This Work Order and any amendments hereto are subject to the terms and conditions of the Master Services Agreement dated                      200  between Virtusa and Metavante.

Services:

Deliverables:

Work Schedule:

Resources:

Resources and Monthly Fee Schedule:

Qty	Description Project Team Resources	Utilization	Daily Rate	Monthly Fee
	MONTHLY FEE

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Additional Resources:

Payment Terms and Acceptance Criteria:

Metavante Responsibilities:

Special Terms:

	VIRTUSA CORPORATION
“Metavante”	“Virtusa”
Signature	Signature
Name	Name
Title	Title
Date	Date

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EXHIBIT B

Definitions.  The following defined terms used in this Agreement shall have the meanings specified below:

“Agreement” shall mean this Master Services Agreement between Metavante and Virtusa.

“Confidential Information” of Metavante or Virtusa shall mean all information and documentation of Metavante and Virtusa, respectively, whether disclosed to or accessed by Metavante or Virtusa in connection with this Agreement, including (1) with respect to Metavante, all Metavante Data and all information of Metavante or its customers, suppliers, contractors and other third parties doing business with Metavante, (2) with respect to Metavante and Virtusa, the terms of this Agreement and (3) any information developed by reference to or use of Metavante’s or Virtusa’s information; provided , however, that except to the extent otherwise provided by Law, the term “Confidential Information” shall not include information that (a) is independently developed by the recipient, as demonstrated by the recipient’s written records, without violating the disclosing Party’s proprietary rights, (b) is or becomes publicly known (other than through unauthorized disclosure), (c) is disclosed by the owner of such information to a third party free of any obligation of confidentiality, (d) is already known by the recipient at the time of disclosure, as demonstrated by the recipient’s written records, and the recipient has no obligation of confidentiality other than pursuant to this Agreement or any confidentiality agreements between Metavante and Virtusa entered into before the Effective Date or (e) is rightfully received by a Party free of any obligation of confidentiality, provided that (i) such recipient has no knowledge that such information is subject to a confidentiality agreement and (ii) such information is not of a type or character that a reasonable person would have regarded it as confidential.

“Data Safeguards” shall have the meaning set forth in Section 1.3.

“Deliverables” are defined as the Developed Software and the Materials.

“Developed Software” shall mean any Software, or modifications or enhancements to Software, and Related Documentation developed pursuant to this Agreement by or on behalf of (1) Virtusa, (2) Virtusa Agents, (3) Virtusa and Metavante or Metavante Agents jointly, (4) Virtusa Agents and Metavante or Metavante Agents jointly or (5) Virtusa, Virtusa Agents, Metavante and Metavante Agents jointly.

“Force Majeure Event” shall have the meaning set forth in Section 1.10.

“Governmental Authority” shall mean any Federal , state, municipal, local, territorial, or other governmental department, regulatory authority, judicial or administrative body, whether domestic, foreign or international.

“Law” shall mean any declaration, decree, directive, legislative enactment, order, ordinance, regulation, rule or other binding restriction of or by any Governmental Authority.

25

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT; [***] DENOTES OMISSIONS.

“Losses” shall mean any and all damages, fines, penalties, deficiencies, losses, liabilities (including settlements and judgments) and expenses (including interest, court costs, reasonable fees and expenses of attorneys, accountants and other experts and professionals or other reasonable fees and expenses of litigation or other proceedings or of any claim, default or assessment).

“Materials” means literary works or other works of authorship created under this Agreement, including manuals, training materials and documentation, but excluding Software and Related Documentation.

“Metavante” shall mean Metavante Corporation, a Wisconsin corporation.

“Metavante Agents” shall mean the agents, subcontractors and representatives of Metavante, other than Virtusa and Virtusa Agents.

“Metavante Contract Manager” shall mean the individual designated by Metavante to serve as the primary Metavante representative to Virtusa.

“Metavante Data” shall mean all data and information (1) submitted to Virtusa or Virtusa Agents by or on behalf of Metavante, (2) obtained, developed or produced by Virtusa or Virtusa Agents in connection with this Agreement or (3) to which Virtusa or Virtusa Agents have access in connection with the provision of the Services.

“Metavante Service Location(s)” shall mean any service location owned or leased by Metavante at which Virtusa provides the Services for Metavante.

“Metavante Software” shall have the meaning set forth in Section 2.4 hereof.

“Parties” shall mean Metavante and Virtusa, collectively.

“Party” shall mean either Metavante or Virtusa, as the case may be.

“Project Staff” shall mean the personnel of Virtusa and Virtusa Agents who provide the Services.

“Related Documentation” shall mean, with respect to Software and Tools, all materials, documentation, specifications, technical manuals, user manuals, flow diagrams, file descriptions and other written information that describes the function and use of such Software or Tools, as applicable.

“Residual Information” shall mean concepts, know-how or techniques that are retained in the unaided memories of a Party’s personnel who have access to Confidential Information of the other party, but only to the extent that such concepts, know-how or techniques are part of the general knowledge and skill of such personnel who work in the application development and maintenance sector and are not Confidential Information of the other Party.

“Services” are defined as the professional services provided by Virtusa’s employees and consultants for Metavante under this Agreement.

26

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT; [***] DENOTES OMISSIONS.

“Software” shall mean the source code and object code versions of any applications programs, operating system software, computer software languages, utilities, other computer programs and Related Documentation, in whatever form or media, including the tangible media upon which such applications programs, operating system software, computer software languages, utilities, other computer programs and Related Documentation are recorded or printed, together with all corrections, improvements, updates and releases thereof.

“Third Party Claims”  shall mean claims raised against a Party by a Third Party.

“Tools” shall mean any Software development and performance testing tools, know-how, methodologies, processes, technologies or algorithms and Related Documentation used by Virtusa in providing the Services.

“Virtusa” shall mean Virtusa Corporation, a Delaware corporation.

“Virtusa Agents” shall mean the agents, subcontractors and representatives of Virtusa.

“Virtusa Contract Manager” shall have the meaning set forth in Section 1.5.

“Virtusa Service Location(s)” shall mean any Virtusa service location set forth in Exhibit C and any other service location approved by Metavante in writing.

“Work Product” shall mean the Deliverables and all information developed by Virtusa for Metavante under this Agreement.

27

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT; [***] DENOTES OMISSIONS.

AMENDMENT TO THE MASTER SERVICES AGREEMENT

WHEREAS, Metavante Corporation, a Wisconsin corporation with its primary place of business at 4900 West Brown Deer Road, Brown Deer WI 53223 (“Metavante”) and Virtusa Corporation, a Delaware corporation with offices at 2000 West Park Drive, Westborough, MA 01581 (“Virtusa”) entered into a Master Services Agreement dated as of March 23, 2004  (the “MSA”);

WHEREAS,  the parties seek to amend the MSA to permit the parties and the Affiliates (as defined below) of either party to enter into Work Orders with the other party or Affiliates thereof, subject to the terms of the MSA;

WHEREAS, the parties seek to extend enterprise wide pricing to Metavante and its Affiliates who engage Virtusa to perform services, on the terms set forth herein;

NOW THEREFORE, for valuable consideration, the sufficiency of which is hereby acknowledged, the parties agree as follows:

1.Definitions

a.“Affiliate” shall mean, with respect to any Person, any other Person who is directly or indirectly controlling, controlled by or under common control with such Person as of the Effective Date of the MSA or thereafter.  A Person shall be deemed to be an Affiliate of another Person only so long as the foregoing control relationship exists.  For the purposes of this definition, the term “control”, when used with respect to any Person, means the possession, directly or indirectly, of voting securities representing the right to elect a majority of the Board of Directors (or other governing body) of such Person.

b.“Person” means an individual, corporation, partnership, association, trust or other entity or organization.

c.Capitalized terms used herein but not defined herein shall have the meaning set forth in the MSA.

2.Each party and/or any of its Affiliates may enter into a Work Order with the other party or any Affiliate thereof, subject to the terms of the MSA.  For purposes of such Work Order, the party entering into the Work Order shall be considered the sole contracting party and such party’s Affiliates will have no liability with respect to such Work Order and any terms hereunder or thereunder, unless specifically stated in a Work Order.  Thus, for example, if [******], entered into a Work Order with Virtusa Corporation, only [*****] would be deemed to be a party to the Work Order, and with respect to the MSA, [*****] would replace references to “Metavante” throughout the MSA with respect to that Work Order only.

3.The parties agree that the resource rates as set forth in Exhibit A attached hereto [*********************] as set forth in Exhibit B attached hereto shall be in effect for the term of January 1, 2006 to December 31, 2006 (the “Term”), and shall apply to all work orders entered into between Metavante, or an Affiliate of Metavante, with Virtusa during the Term.  The rates [*********************] to any Work Order during the Term under which Virtusa performs services for any such party during the Term, subject to the terms herein.

4.In the event that Metavante or an Affiliate thereof acquires any existing customer of Virtusa during the Term, the parties shall mutually agree in writing on the rates and [************************] except that in no event shall any fees billed by Virtusa to the acquired customer prior to the acquisition be [**************************** ********************************************************************************************* ******************************************]

1

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT; [***] DENOTES OMISSIONS.

5.The infrastructure fee on all Work Orders entered into by Metavante or any Affiliate with Virtusa during the Term shall be equal to [**************************************************************************** *****************************].

6.Except as otherwise stated herein, all terms of the MSA remain in full force and effect.

IN WITNESS WHEREOF, the parties have executed this Amendment to the MSA by their duly authorized representatives as of the day and year below.

METAVANTE CORPORATION		VIRTUSA CORPORATION
“Metavante”		“Virtusa”
/s/ James R. Geschke		/s/ Thomas R. Holler
Signature		Signature
James R. Geschke		Thomas R. Holler
Name		Name
Executive Vice President
Financial Technology Services		CFO
Title		Title
		3/31/06
Date		Date
METAVANTE COPORATION
“Metavante”
/s/ David S. Fortney
Signature
David S. Fortney
Name
Senior Vice President and Division Executive
Electronic Presentment and Payment
Metavante Corporation
Title
	Date

2

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT; [***] DENOTES OMISSIONS.

EXHIBIT A

Virtusa Resource Rates for Metavante and its Affiliates During the Term

[***]

3

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT; [***] DENOTES OMISSIONS.

EXHBIT B

[***]

4

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT; [***] DENOTES OMISSIONS.

AMENDMENT # 2 TO THE MASTER SERVICES AGREEMENT

WHEREAS, Metavante Corporation, a Wisconsin corporation with its primary place of business at 4900 West Brown Deer Road, Brown Deer WI 53223 (“Metavante”) and Virtusa Corporation, a Delaware corporation with offices at 2000 West Park Drive, Westborough, MA 01581 (“Virtusa”) entered into a Master Services Agreement dated as of March 23, 2004,as amended to date (the “MSA”);

WHEREAS,  the parties seek to amend the MSA to add a Canadian rate card for use in connection with services to be performed by Virtusa for a Canadian Affiliate of Metavante, subject to the terms of the MSA;

NOW THEREFORE, for valuable consideration, the sufficiency of which is hereby acknowledged, the parties agree as follows:

1.The parties agree that the resource rates as set forth in Exhibit A attached hereto shall be in effect for the term of January 1, 2006 to December 31, 2006 (the “Term”), and shall apply to all work orders entered into between Virtusa and any Canadian Affiliate of Metavante.

2.Except as otherwise stated herein, all terms of the MSA remain in full force and effect.

IN WITNESS WHEREOF, the parties have executed this Amendment to the MSA by their duly authorized representatives as of the day and year below.

METAVANTE CORPORATION			VIRTUSA CORPORATION
“Metavante”			“Virtusa”
By:	/s/ James R. Geschke		/s/ Danford Smith
James R. Geschke			Signature
Executive Vice President & Division Executive
Financial Technology Services			Danford Smith
Date:			Name
			President and COO
			Title
			9/28/06
			Date
By:	/s/ David S. Fortney
David S. Fortney
Senior Vice President & Division Executive
Electronic Presentment and Payment
Date:		9/21/06

1

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT; [***] DENOTES OMISSIONS.

EXHIBIT A

Virtusa Resource Rates for Canadian Metavante Affiliates During the Term

[***]

2

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT; [***] DENOTES OMISSIONS.

AMENDMENT # 3 TO THE MASTER SERVICES AGREEMENT

WHEREAS, Metavante Corporation, a Wisconsin corporation with its primary place of business at 4900 West Brown Deer Road, Brown Deer WI  53223 (“Metavante”) and Virtusa Corporation, a Delaware corporation with offices at 2000 West Park Drive, Westborough, MA 01581 (“Virtusa”) entered into a Master Services Agreement dated as of March 23, 2004, as amended to date  (the “MSA”);

WHEREAS, the parties previously entered into the first Amendment to the MSA on March 31, 2006 and Amendment #2 to the MSA on September 28, 2006;

WHEREAS,  the parties seek to amend the MSA to change the United States of America (U.S.) and Canadian rate cards for use in connection with services to be performed by Virtusa, subject to the terms of the MSA;

NOW THEREFORE, for valuable consideration, the sufficiency of which is hereby acknowledged, the parties agree as follows:

1.[********************] been incorporated into the resource rates set forth in Exhibit A of this Amendment #3 and Virtusa will cease billing [**********************] on all invoices for services starting March 1, 2007. Effective March 1, 2007, all references to a [****************************] including item #5 in the Amendment dated March 31, 2006, are hereby deleted.

2.That the resource rates as set forth in Exhibit A attached hereto [*************************] set forth in Exhibit B shall be in effect beginning March 1, 2007, and shall apply to all services provided under any Work Order, Exhibit C, entered into between Metavante, or an Affiliate of Metavante, and Virtusa.

3.Resource rates in Exhibit A may be adjusted on an annual basis beginning April 1, 2008.  [***************** *******************************************************************************]

[********] shall be based on the [*********] in the [******************************************* *]conducted and published by [**********] or such other comparable source as the Parties may mutually agree to.

4.Resources that perform services at a [******] locations are defined to be “[***]” resources and will be invoiced using the “[***]” rate.  Resources that perform services in a country where Virtusa operates an [******] are defined to be “[***]” resources and will be invoiced using the “[***]” rate.

5.[***************************************************************************************** ****************************************************************************************** **************************************************]

6.Travel expenses will be reimbursed when Virtusa has obtained Metavante’s prior written approval.

Eligible travel expenses for reimbursement:

[***]

b.Air, lodging, land travel when Metavante requests the resource to travel from their assigned location in the U.S. or Canada to another location in U.S. or Canada.

Non-eligible travel expenses:

c.[********************************************************************************* ***************************]

1

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT; [***] DENOTES OMISSIONS.

7.Each month Virtusa will invoice Metavante for services performed the previous month for the services defined in the Work Order.  There will be one invoice per Work Order, delivered to the address specified by Metavante’s Accounts Payable department.  Each invoice will indicate the Work Order identification and provide a breakdown and distribution of charges by name of the individual personnel assigned to the Work Order.  Metavante shall pay Virtusa within [***] days after receipt of such invoice submitted by Virtusa.

8.All Virtusa Resources providing services under any Work Order shall record project hours in Metavante’s project report system.  Metavante will inform Virtusa of the project codes to use for each Work Order for time reporting.

9.Metavante will provide Virtusa with Metavante’s non-employee on-boarding requirements.  [************** ****************************************************************************************** ***************************]  Virtusa will notify Metavante if any national, regional or local laws prevent compliance with any on-boarding requirement.

10.Except as otherwise stated herein, all terms of the MSA remain in full force and effect.

IN WITNESS WHEREOF, the parties have executed this Amendment to the MSA by their duly authorized representatives as of the day and year below.

METAVANTE CORPORATION	VIRTUSA CORPORATION
“Metavante”	“Virtusa”
/s/ Frank D’Angelo	/s/ Thomas R. Holler
Signature	Signature
Frank D’Angelo	Thomas R. Holler
Name	Name
Sr. EVP	CFO
Title	Title
3/25/07	March 29, 2007
Date	Date

2

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT; [***] DENOTES OMISSIONS.

EXHIBIT A

Virtusa Resource Rates for Metavante and its Affiliates

Effective March 1, 2007

[***]

3

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT; [***] DENOTES OMISSIONS.

EXHBIT B

[***]

4

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT; [***] DENOTES OMISSIONS.

EXHBIT C

WORK ORDER TEMPLATE

Customer:                             Metavante Corporation

Project Name:

Start Date:

Term:

Services:

[***]

Deliverables:

Work Schedule:

Resources and Monthly Fee Schedule:

Number	Resource Role	Days/Wk	Location	Daily Rate	Monthly Total	Annual Total
	Resource Subtotal
	Travel Estimate
	Total Estimated Fees

Payment Terms and Acceptance Criteria:

Payment will be in accordance with the terms defined in the Master Service Agreement (MSA).

Metavante Responsibilities:

Approval:

Metavante Corporation	VIRTUSA CORPORATION
“Customer”
Signature	Signature
Name	Name
Title	Title
Date	Date (“Effective Date”)

5

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT; [***] DENOTES OMISSIONS.

AMENDMENT #4 TO THE MASTER SERVICES AGREEMENT

WHEREAS, Metavante Corporation, a Wisconsin corporation with its primary place of business at 4900 West Brown Deer Road, WI 53223 (“Metavante”) and Virtusa Corporation, a Delaware corporation with offices at 2000 West park Drive, Westborough, MA 01581 (“Virtusa”) entered into a Master Services Agreement dated as of March 23, 2004 (the “MSA”);

WHEREAS, the parties seek to amend the MSA to permit the parties and the Affiliates (as defined in the MSA) of either party to enter into Work Orders with the other party or Affiliates thereof, subject to the terms of the MSA;

WHEREAS, the parties seek to establish a framework for Service Level Agreements (“SLAs”) to be specified for Work Orders where Metavante and its Affiliates engage Virtusa to perform services;

NOW THEREFORE, the parties agree as follows:

1. Definitions

a)“Engagement Type” shall mean, with respect to any Work Order, the nature of the work being performed by Virtusa.  Only the Engagement Types identified in Attachment A of this Amendment shall be governed by this Amendment.

b)“SLA” Service Level Agreement shall mean, with respect to any Work Order for the Engagement Types set forth in Attachment A, the applicable specific measurements of the service performed by Virtusa on Metavante’s behalf, targets levels for such service, remediation or cure actions available if target levels are not achieved and any penalties that might be incurred by Virtusa if cure actions do not result in Virtusa performing services at the applicable SLA level..  The specific SLAs for each Engagement Type are set forth in Attachment A.  Work Orders may provide for more than one project or units of work for a single project.  The parties agree that:

1.     Service Level Target (Level 1) SLAs will apply only to individual projects or units of work for such project; and

2.     Increased Impact Service Level (Level 2) SLAs will apply to all projects and/or unites of work contained in a single Work Order, e.g. a large project with many units of work, a group of projects or a group of activities listed in a single Work Order).

If Virtusa’s performance on a project or unit of work results [************************************ ***************************************] if its performance for any other unit of work or project under the same Work Order exceeds the applicable SLA target for such unit or work or project.

For illustrative purposes only,  Virtusa [**************************************] by completing all of the projects within a singe Work Order per the agreed upon estimates in aggregate, even though some projects came in above estimate and

1

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT; [***] DENOTES OMISSIONS.

below estimate.  Virtusa may not, however, [**************************************]*********** ************************************************************************************** ********************************************************]

c)“Immediate Defect” shall mean, with respect to any work order, an identified defect in a deliverable that causes a system outage (e.g. system becomes “hung” or crashes)  or prevents further testing of the program or component and a workaround does not exist and the defect must be fixed before testing can continue.   This definition of “Immediate Defect” refers only to the development or defect fixing processes, and is not the same as a production issue/ticket.

d)“High Defect” shall mean, with respect to any Work Order, an identified material defect in a deliverable such as a data loss, incorrect functionality, or other issues cause material impairment but not interrupted functionality.

e)“Priority Level” shall mean, with respect to any Work Order, the following:

·Priority 0 — Severe impact on Metavante’s client’s productivity, severe corruption of data, requires immediate change

·Priority 1 — Significant impact on Metavante’s client’s productivity, issue directly affects Metavante’s client’s end-user

·Priority 2 — Significantly reduces system effectiveness, required for next major processing (such as month/quarter end)

·Priority 3 — Work-around is available, several methods to resolve issue

Metavante will assign priority levels to defects. If Virtusa disagrees with the classification of defect, they will escalate to the project triage committee for resolution.

2. SLAs shall apply only to Work Orders for Engagement Types set forth in Exhibit A.  Virtusa and Metavante may agree in writing, however, that certain projects are exempt from [******************] (even though metrics may still be tracked) for individual units of work, projects or Work Orders based on mutual agreement and written or electronic approval between the overall Virtusa Delivery Manager and a senior level manager designated from Metavante.  Such exemptions may apply if:

a. A period of execution is necessary in order to baseline metrics after knowledge transfer when a new group or a new engagement type in an existing group is engaged prior to any penalties being effective( the parties will mutually agree in writing as to the baseline/benchmarking period); or

b. Virtusa is unable to operate within specified operating thresholds of metrics due to reasons other than caused directly by Virtusa’s negligence. For the avoidance of doubt, Virtusa shall have no liability or deemed to fail and SLA hereunder due to any error or defect or other SLA failure due to: programming errors in, or non-conformance to any metric hereunder to the extent caused directly or indirectly by (i) Metavante’s hardware malfunction, or other causes beyond the reasonable control of Virtusa, (ii) third party software not licensed through Virtusa, (iii) the installation or operation of the application in a hardware or operating environment not expressly stated in the applicable Work Order;(iv) modification, customization, extension of or damage to the application (other than by Virtusa); (v) Metavante’s failure to fulfill its own responsibilities under the MSA and/or applicable Work Order (“Excluded Errors”). For the avoidance of doubt, the defects shall

2

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT; [***] DENOTES OMISSIONS.

also not apply to errors surrounding functionality (or lack of) unless the functionality is required and expressly stated in the specifications in the Work Order. To the extent any of the Excluded Error causes an SLA to be missed or a metric to fail, the parties will make a corresponding adjustment to such metric or SLA to reflect the Excluded Error.

3. [***] provide written acceptance or rejection of such Traceability Process within [***] of receipt of such Traceability Process.    Metavante’s failure to provide written acceptance or rejection during such period shall constitute Metavante’s acceptance of the Traceability Process proposed by Virtusa.  Virtusa’s failure to develop any such Traceabilitiy Process, however, shall not constitute a waiver of its SLA obligations hereunder.

4. Virtusa and Metavante shall conduct all SLA measurements based on the then current mutually approved written effort estimates (refined estimate plus agreed upon changes), project schedule and quality estimates (post scope change adjustments).

5. Virtusa will be measured for [****************] based solely on its limited scope of responsibility and deliverables as set forth in the applicable Work Order (e.g. Virtusa’s [*************] will not influenced by project successes or failures which are the responsibility of Metavante and/or third parties).

6. Virtusa will report the metrics described in Schedule A for each work order by line of business to Metavante [*****]. If an SLA is missed, Metavante will provide written or e-mail notice to Virtusa within [*****] after receiving the metrics reports from Virtusa and the parties will mutually determine the cause of the SLA failure. If the parties mutually agree in writing that [******], then Virtusa shall undertake corrective action as set forth in the SLA. Virtusa will not be responsible [***] if it can be established that SLAs were missed due to [******] on Metavante’s part.

7. The parties will also conduct a mutual estimate review if there is an effort variance or a productivity SLA is missed. A project schedule review will be conducted as soon as schedule variance forecast or SLA is missed.

8. Every project or group of projects defined in a Work Order must have defined deliverables for the duration of each project or Work Order.  Such deliverables may be set forth in a Work Order schedule which will be mutually agreed upon in writing between the parties.

9. Each SLA metric will have the following operating values:

·Green, when values are within acceptable or operating thresholds or better than desired values

·Yellow, when a failure to meet service level target has been detected

·Red, when value exceeds increased impact service levels

10. Upon missing an SLA target [******], a cure period will be provided to Virtusa to bring metrics into accepted operating thresholds.  Specific cures are defined in Attachment A of this Amendment.

3

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT; [***] DENOTES OMISSIONS.

11. Virtusa’s performance of the services in accordance with the service levels and metrics as set forth herein are also conditioned on mutually agreed upon (in writing) assumptions and scope for each Work Order. If during the course of any Work Order, if any of these assumptions are proved invalid or change, or if the scope changes for a Work Order for any reason, or a Metavante Non-Compliance (as defined below) occurs, Virtusa has the right to make a written proposal (a “Change Request”) detailing the nature of the Metavante Non-Compliance, or a change or modification to the Work Order scope or related assumption. Such Change Request may result in a change in the metrics, service levels, timelines and/or nature and size of the team assigned to the Work Order, or as otherwise agreed in writing by the parties.

With respect to the performance and satisfaction of the service levels and metrics as set forth herein, both parties acknowledge and agree that Virtusa’s performance of the services and achievement of the service levels and metrics as set forth herein, are also subject to the timely and satisfactory performance of Metavante’s applicable written obligations and responsibilities under this Agreement and other agreements related hereto (including without limitation, performing testing or acceptance procedures, responding to change requests of Virtusa, providing access to equipment and needed resources, dedicating personnel to timely complete the applicable tasks or providing responses to information requests) (in the aggregate termed “Metavante Service Level Obligations”). To the extent that Metavante fails to comply with the Metavante Service Level Obligations, Virtusa shall have the right to submit a Change Request in good faith and Virtusa shall be relieved of its applicable service level obligations until such Change Request is agreed to by the parties on mutually agreeable terms in writing. In connection with the applicable Work Order, the parties will mutually agree on any additional obligations, if any, of either party.

The parties will use all reasonable commercial efforts to resolve any such Change Requests as soon as possible and agree on any impacts or forgiveness or abeyance of any service level metrics or timelines and expectations. If the parties are unable to agree on a resolution, the parties agree to work continuously to resolve the issue and escalate the issues to the respective program managers, Delivery Unit Heads and executive sponsors, if and as needed. Additionally, Metavante shall use all reasonable commercial efforts to cure any Metavante Non-Compliance to the extent reasonably possible. During the time period in which a Change Request of Virtusa has been submitted but not executed by Metavante, Virtusa shall continue to perform the Services at existing rates until resolution. However, in no event shall Virtusa be deemed to be in violation of the particular metric against which Virtusa is managing nor shall Virtusa be obligated to perform any services [******] even if the applicable tolerance level has been exceeded until such time as all outstanding Change Requests have been finalized and executed in good faith by the parties hereto.

With respect to [******], to the extent that any Change Request as executed by the parties adds or reduces additional time or effort to any existing Work Order, such additional time shall [******] for the purpose of determining the [***] of hours or effort provided for the effort and the amount of tolerance against which Virtusa is managing and is measured. In this connection, Virtusa will accompany any re-estimate by Virtusa with a Change Request, if applicable, to reflect any increased or decreased time as a result of a Project Change.

12.  Virtusa will track, measure and report the SLA metrics monthly by project, group or Work Order and the line of business.

4

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT; [***] DENOTES OMISSIONS.

13. [************************************************************************************************ ************************************************************************************************]

14. [************************************************************************************************ *************************************************************]

15. [****************************************]

·[************************************************************************]

·[**************************************************************************]

·[******************************************************************************************** ********************************************************************************************* *****************************************]

IN WITNESS WHEREOF, the parties have executed the Amendment to the MSA by their duly authorized representatives as of the day and year below.

METAVANTE CORPORATION	VIRTUSA CORPORATION
“Metavante”	“Virtusa”
/s/ Dave Fortney	/s/ Danford Smith
Signature	Signature
Dave Fortney	Danford Smith
Name	Name
SVP & CTO	COO
Title	Title
28 March 2008	4-13-08
Date	Date (“Effective Date”)

5

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT; [***] DENOTES OMISSIONS.

Attachment A

Service Level Table

[***]

6

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT; [***] DENOTES OMISSIONS.

AMENDMENT # 5 TO THE MASTER SERVICES AGREEMENT

WHEREAS, Metavante Corporation, a Wisconsin corporation with its primary place of business at 4900 West Brown Deer Road, Brown Deer WI  53223 (“Metavante”) and Virtusa Corporation, a Delaware corporation with offices at 2000 West Park Drive, Westborough, MA 01581 (“Virtusa”) entered into a Master Services Agreement dated as of March 23, 2004, as amended  (the “MSA”);

WHEREAS, the parties previously entered into the first Amendment to the MSA on March 31, 2006, Amendment #2 to the MSA on September 28, 2006 and Amendment #3 to the MSA dated as of March 29, 2007 (“Amendment No. 3”);

WHEREAS,  the parties seek to amend the MSA to reflect rates in effect under the MSA and related work orders for the period of April 1, 2008 to March 31, 2009, subject to the terms of the MSA;

NOW THEREFORE, for valuable consideration, the sufficiency of which is hereby acknowledged, the parties agree as follows:

1.That the resource rates as set forth in Exhibit A attached hereto [*******************************] as set forth in Exhibit B attached hereto shall be in effect beginning April 1, 2008, and shall apply to all services provided under any Work Order entered into between Metavante, or an Affiliate of Metavante, and Virtusa during the period from April 1, 2008 to March 31, 2009.  The Exhibits A and B attached hereto replace in their entirety such exhibits in Amendment No. 3.

2.Section 5 of Amendment No. 3 is hereby deleted for all purposes hereunder and of no further force or effect.

3.Capitalized terms used herein but not defined herein shall have the meanings set forth in the MSA.

4.Except as otherwise stated herein, all terms of the MSA remain in full force and effect, including without limitation, Sections 3, 4, 6, 7, 8 and  9 of Amendment No. 3

IN WITNESS WHEREOF, the parties have executed this Amendment to the MSA by their duly authorized representatives as of the day and year below.

METAVANTE CORPORATION	VIRTUSA CORPORATION
“Metavante”	“Virtusa”
/s/ David S. Fortney	/s/ Paul D. Tutun
Signature	Signature
David S. Fortney	Paul D. Tutun
Name	Name
SVP & CTO	VP & General Counsel
Title	Title
June 20, 2008	6-30-08
Date	Date

1

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT; [***] DENOTES OMISSIONS.

EXHIBIT A

Virtusa Resource Rates for Metavante and its Affiliates

[***]

2

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT; [***] DENOTES OMISSIONS.

EXHBIT B

[***]

3

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT; [***] DENOTES OMISSIONS.

AMENDMENT # 6 TO THE MASTER SERVICES AGREEMENT

WHEREAS, Metavante Corporation, a Wisconsin corporation with its primary place of business at 4900 West Brown Deer Road, Brown Deer WI 53223 (“Metavante” or “Customer”) and Virtusa Corporation, a Delaware corporation with offices at 2000 West Park Drive, Westborough, MA 01581 (“Virtusa”) entered into a Master Services Agreement dated as of March 23, 2004, as amended by the Prior Amendments (as defined below) (the “Agreement”);

WHEREAS, the parties previously entered into the first Amendment to the MSA on March 31, 2006, Amendment #2 to the MSA on September 28, 2006, Amendment #3 to the MSA dated as of March 29, 2007 (“Amendment No. 3”), Amendment #4 to the MSA dated as of April 13, 2008 (“Amendment No. 4”) and Amendment #5 to the MSA dated as of June 27, 2008 (“Amendment No. 5”) (collectively, the “Prior Amendments”)

WHEREAS,  the parties seek to amend the Agreement to reflect the terms and conditions under the Agreement and related work orders for the period of April 1, 2009 to December 31, 2009, subject to the terms of the Agreement, as amended hereby;

NOW THEREFORE, for valuable consideration, the sufficiency of which is hereby acknowledged, the parties agree in this Amendment as follows:

1.Capitalized terms used herein but not defined herein shall have the meanings set forth in the MSA.

2.Section 8.1 of the MSA is hereby deleted and replaced in its entirety with the following:

“This Agreement will become effective as of the Effective Date and will remain in effect until December 31, 2009 or until all Services have been completed or terminated as provided herein, whichever occurs later, unless otherwise terminated under the provisions of the Agreement.  Metavante may terminate this Agreement or any Work Order for any reason, [***] written notice to Virtusa, unless otherwise stated in a Work Order with respect to such Work Order.

Virtusa may terminate this Agreement for any reason [*************] prior written notice to Metavante, provided that no active Work Order is in effect.  ”

3.That the resource rates as set forth in Exhibit A attached hereto [************************] as set forth in Exhibit B attached hereto shall be in effect beginning April 1, 2009, and shall apply to all services provided under any Work Order entered into between Metavante, or an Affiliate of Metavante, and Virtusa during the period from April 1, 2009 to December 31, 2009 (the “Renewal Period”). The Exhibits A and B attached hereto replace in their entirety such exhibits in the Agreement as applied to the Renewal Period.

4.A new Section 10.12 to the Agreement is hereby added as follows:

“Section 10.12       Privacy of Consumer Financial Information. If and to the extent Virtusa receives, stores or accesses any “non-public personal information” as defined in the Privacy of Consumer Financial Information Rule (12 CFR Part 573) or Section 504 of the Gramm-Leach-Bliley Act, Pub. L. 106-102 (“Privacy Regulations”), as such regulations may be amended from time to time, or other materials that, in Metavante’s reasonable

1

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT; [***] DENOTES OMISSIONS.

determination, are the subject of relevant privacy law, rule or regulation , then Virtusa agrees to comply with the requirements of such applicable law(s), rule(s) and regulation(s).  In addition to those obligations set forth elsewhere in this Agreement, as to non-public personal information received by Virtusa, Virtusa agrees to implement controls and procedures designed to (1) ensure the security and confidentiality thereof; (2) protect against any anticipated threats or hazards to the security or integrity of such records; (3) detect unauthorized access to or use of such records or information and (4) protect against unauthorized access to or use of such records or information that would result in harm or inconvenience to any customer of Metavante (the “Safeguarding Objectives”).  Virtusa represents and agrees that it has and will maintain in place commercially reasonable precautions to safeguard the confidentiality, security and integrity of Metavante Data in a manner designed to meet the Safeguarding Objectives.  These precautions shall include (A) contractual restrictions on access to the information by vendors and contractors, (B) intrusion detection systems on all information systems of Metavante maintained or controlled by Virtusa, and (C) notification procedures for notifying Metavante promptly in the event a security breach is detected or suspected, as well as other response programs when there is a suspected or detected unauthorized disclosure, access or attempted access of non-public personal information.  These precautions shall also include, as appropriate: (i) access controls to Metavante information systems, including controls to identify and permit access only to authorized individuals and controls to prevent access to Metavante Confidential Information through fraudulent means; (ii) employee controls and training; (iii) physical access restrictions at locations where Metavante Confidential Information is located; (iv) encryption of electronic Metavante Confidential Information when appropriate or legally required; and (v) a disaster recovery plan as appropriate to protect against loss or damage to Metavante Confidential Information due to potential hazards such as fire or water damage or technological failures.  Virtusa agrees that it will (i) monitor the foregoing measures with periodic audits or testing and (ii) provide copies of the same sufficient to assure to Metavante or its regulatory authorities that Virtusa is implementing provisions of this Agreement.

a.Virtusa shall notify Metavante immediately in the event there is any suspected or actual unauthorized access, use, disclosure or alteration to Metavante Confidential Information.

5.Under Section 5.2(2) of the Agreement (“Indemnity by Virtusa”), [***********] is hereby added after the words “Article 3” in such clause in the Agreement.

6.The first sentence of Section 4.1 of the Agreement is hereby deleted in its entirety and replaced with the following: “Virtusa shall send invoices to Metavante for the fee(s) for Services set forth in the Work Order and any related expenses monthly; provided that all such invoices shall contain a Purchase Order number and refer to or be issued pursuant to a fully executed Work Order between the parties.

7.     Section 2.4 of the Agreement is hereby deleted.

8.     Section 6.2(11) is hereby deleted and replaced with the following:

“Secure Coding.  Virtusa shall adhere to Metavante’s policy and coding standards made known to Virtusa, and industry best practices in software programming to prevent holes or other vulnerabilities in software code or architecture that might otherwise be exploited by

2

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT; [***] DENOTES OMISSIONS.

unauthorized third parties seeking to intrude, penetrate, or hack into software programs developed hereunder.  Virtusa shall not program or design into any software programs developed hereunder any security keys, embedded code or other device which are specifically designed to prevent Metavante from using any components of the software.”

9.     A new Section 6.2(12) is hereby added to the Agreement as follows:

“6.2(12)  Virtusa will not include in any Deliverable, which is provided to Metavante under this Agreement, any of its Pre-existing Virtusa Property including without limitation software or intellectual property owned by Virtusa , or third party shareware, or Open Source software, without an authorized Metavante officer’s prior written consent”

10.A new Section 1.13 is hereby added to the Agreement as follows:

“1.13 Resource Quality.  Virtusa acknowledges that its resources (employees, agents, or contractors) shall be subject to the continuing approval of Metavante. If at any time Metavante, in its reasonable judgment and in good faith, determines that any of the Virtusa resources are inadequate or unsatisfactory, Metavante shall so advise Virtusa in writing (stating with [******] and, in addition, [******].  If Metavante still requests a Resource [******], Virtusa shall [**************** ******] of such [***] take action to correct the situation by removing the resource and, if requested by Metavante, replacing, within a commercially reasonable of time, the resource with a competent individual meeting the specific requirements of the assignment and this Agreement. In addition, if Metavante seeks to terminate any resource for failure to comply with Metavante rules, regulations, or policies (“For Cause”), [****************************** *************************] shall take action to correct the situation by removing the resource terminated For Cause.  Failure by Virtusa to remove a resource due to a Resource Performance Termination [*********************] of written notice and [***] between the parties, or failure to remove a resource For Cause within [**************************] shall be a breach of this Agreement.  Upon a failure by Virtusa to remove such resources by the foregoing timeframes, [*********************************************************** ***** ***************************] This Section 1.13 shall not supersede any requirement for notice of termination for convenience (and shall not replace the notice of convenience provisions) with respect to any removal of resources, nor shall this Section 1.13 replace provisions governing termination of a Work Order for breach or the other termination provisions of the Agreement (and resource removal terms) or of the applicable Work Orders.

3

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT; [***] DENOTES OMISSIONS.

11.Except as otherwise stated herein, all terms of the Agreement shall remain in full force and effect.

IN WITNESS WHEREOF, the parties have executed this Amendment to the MSA by their duly authorized representatives as of the day and year below.

METAVANTE CORPORATION	VIRTUSA CORPORATION
“Metavante”	“Virtusa”
/s/ Brian Hurdis	/s/ Paul D. Tutun
Signature	Signature
Brian Hurdis	Paul D. Tutun
Name	Name
SEVP/CIO	VP & General Counsel
Title	Title
5/22/09	5/27/09
Date	Date

4

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT; [***] DENOTES OMISSIONS.

EXHIBIT A

[***]

5

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE ACT; [***] DENOTES OMISSIONS.

EXHBIT B

[***]

6

EX-10.14

Exhibit 10.14

SIXTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT

This Sixth Amendment (this “Amendment”) is made as of March 31, 2009 to that certain Amended and Restated Credit Agreement dated September 29, 2006, as previously amended by First Amendment to Amended and Restated Credit Agreement dated as of September 30, 2007, Second Amendment to Amended and Restated Credit Agreement dated as of December 30, 2007, Third Amendment to Amended and Restated Credit Agreement dated as of February 7, 2008, Fourth Amendment to Amended and Restated Credit Agreement dated as of March 31, 2008 and Fifth Amendment to Amended and Restated Credit Agreement dated as of July 30, 2008 (the “Credit Agreement”) between RBS CITIZENS, National Association, successor by merger to Citizens Bank of Massachusetts (“Lender”) and VIRTUSA CORPORATION, a Delaware corporation with an address of 2000 West Park Drive, Westborough, Massachusetts 01581 (“Borrower”). Capitalized terms used and not defined in this Amendment shall have the meanings ascribed to them in the Credit Agreement.

RECITALS

Borrower has requested that Lender agree to extend the Revolving Credit Maturity Date through June 29, 2009.

Lender is amenable to so extending the Revolving Credit Maturity Date, but only on the terms and conditions set forth in the Credit Agreement as amended hereby.

AGREEMENT

In consideration of the foregoing, of the undertakings of Borrower and Lender herein and for other good and valuable consideration, receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

1.   Effective March 31, 2009, the definitions of the term “Revolving Credit Maturity Date” contained in Section 1.1 of the Credit Agreement are deleted and replaced with the following definitions:

“‘Revolving Credit Maturity Date.’  June 29, 2009.”

2.    Effective March 31, 2009, Section 2.4 (a) of the Credit Agreement is hereby deleted in its entirety and replaced with the following text:

“(a) Each Revolving Credit Loan shall bear interest on the outstanding principal amount thereof at a floating rate per annum equal to the sum of : (i) 2.50%, plus (ii) the greater of (x) the Prime Rate, or (y) 3.25%.  The effective rate of interest shall change contemporaneously with any change in the Prime Rate. Such interest shall be payable monthly in arrears on the first Business Day of each month.”

1

3.    Effective March 31, 2009, Section 2.5 (a) of the Credit Agreement is hereby deleted in its entirety and replaced with the following text:

“(a) The Borrower shall pay to the Lender an annual commitment fee (the “Commitment Fee”), computed on a daily basis and payable quarterly in arrears on the first Business Day of each quarter, equal to (i) the excess of (x) the Revolving Credit Commitment at the time (without giving effect to any Letters of Credit or requested Letters of Credit) over (y) Revolving Credit Outstandings from time to time, multiplied by (ii) 0.25%.”

4.    As a condition precedent to the undertakings of the Lender contained in this Fifth Amendment, the Borrower shall pay to the Lender on the date hereof a commitment fee in the amount of $1,500, which Borrower authorizes Lender to debit to Borrower’s primary operating account maintained with Bank.  In addition, effective March 31, 2009, a new Section 2.5(e) is hereby added to the Credit Agreement to read as follows:

“(e)  In addition to all other amounts due from time to time by Borrower to Lender under this Agreement, Borrower shall pay to Lender a “commitment fee” in the amount of .20% per annum times the Revolving Credit Commitment as a condition to any extension of the Revolving Credit Maturity Date.  Such commitment fee is due and payable in full as a condition precedent to each extension of the Revolving Credit Maturity Date.”

5.   Except as set forth on the disclosure schedule attached hereto as Exhibit A, Borrower represents and warrants that all of the representations and warranties made by Borrower in the Credit Agreement and other Loan Documents are and continue to be true and correct on the date hereof, except to the extent that any of such representations and warranties relate by their terms solely to a date prior to date of this Amendment.  Except as set forth on the disclosure schedule attached hereto as Exhibit A, Borrower hereby ratifies and confirms all of its covenants and agreements contained in the Credit Agreement and represents that it is not aware of any default of any of the terms and provisions of the Credit Agreement.

6.   Borrower further represents and warrants that this Amendment is its valid and binding obligation, enforceable against it in accordance with its terms, except as may be affected by bankruptcy and other similar laws of general application affecting the rights and remedies of creditors.

7.  Borrower shall promptly execute and deliver such further documents, instruments and agreements and take such further action as Lender may reasonably request, in its sole discretion, to effect the purposes of this Amendment and the Credit Agreement and other Loan Documents, including, but not limited to the execution and delivery of all documents necessary or reasonably required by Lender to ensure that Lender has perfected liens on all assets of Borrower to the extent originally provided under the Credit Agreement and the other Loan Documents. Borrower hereby appoints any officer or agent of Lender as Borrower’s true and lawful attorney in fact, with power of substitution to endorse the name of Borrower or any of their officers or agents in such regard, exercisable by Lender during the continuance of an Event of Default.

2

8.  Except as otherwise expressly provided in this Amendment, nothing in this Amendment shall extend to or affect in any way any of the Obligations or any of the rights and remedies of Lender arising under the Credit Agreement and other Loan Documents, and Lender shall not be deemed to have waived any or all of such rights and remedies with respect to any Event of Default or event or condition which, with notice or the lapse of time, would become an Event of a Default and which, upon Borrower’s execution and delivery of this Amendment, might otherwise exist or which might hereafter occur.

9.  By execution of this Amendment, Borrower acknowledges and confirms that it does not, as of the date of this Amendment, have any offsets, defenses or claims against Lender or any of its officers, agents, directors or employees whether asserted or unasserted to the Obligations.

10.  To the extent possible and except for the specific changes to the Credit Agreement effected hereby, this Amendment shall be construed to be consistent with the provisions of the Credit Agreement.  In the event of any inconsistency between the provisions of this Amendment and any other document (including, without limitation, any Loan Document), instrument, or agreement entered into by and between Lender and Borrower, the provisions of this Amendment shall govern and control. This Amendment shall be binding upon Lender and Borrower, and their representatives, successors, and assigns, and shall inure to the benefit of Lender and Borrower and their respective successors and assigns. This Amendment and all documents, instruments, and agreements executed in connection herewith incorporate all of the discussions and negotiations between Borrower and Bank, either expressed or implied, concerning the matters included herein and in such other documents, instruments and agreements, any statute, custom, or usage to the contrary notwithstanding. No such discussions or negotiations shall limit, modify, or otherwise affect the provisions hereof. No modification, amendment, or waiver of any provision of this Amendment, or any provision of any other document, instrument, or agreement between any Borrower and Lender shall be effective unless executed in writing by the party to be charged with such modification, amendment, or waiver.

11.  Borrower acknowledges and agrees that it shall promptly pay to Lender the full amount of all reasonable out-of-pocket costs and expenses of Lender incurred by Lender in preparation and documentation of this Amendment and all documents ancillary hereto or incurred by Lender after the date of this Amendment in connection with administration of the Obligations or enforcement of any rights of Lender under the Credit Agreement and other Loan Documents or otherwise in respect of any of the Obligations.

12.  If any clause or provision of this Amendment is determined to be illegal, invalid or unenforceable under any present or future law by the final judgment of a court of competent jurisdiction, the remainder of this Amendment will not be affected thereby.  It is the intention of the parties that if any such provision is held to be invalid, illegal or unenforceable, there will be added in lieu thereof an enforceable provision as similar in terms to such provision as is possible, and that such added provision will be legal, valid and enforceable.

3

13.  This Amendment is delivered to Lender in The Commonwealth of Massachusetts and it is the desire and intention of the parties that this Amendment and the Loan Documents be in all respects interpreted according to the laws of The Commonwealth of Massachusetts. Borrower  specifically and irrevocably consents to the personal and subject matter, jurisdiction and venue of any court of The Commonwealth of Massachusetts sitting in the counties of Suffolk or Middlesex or in the District Court of the United States for the District of Massachusetts with respect to all matters concerning this Amendment or the Loan Documents or the enforcement of any of the foregoing.

14.  This Amendment may be executed in one or more counterparts, each of which will be deemed an original document, but all of which will constitute a single document.  This Amendment will not be binding on or constitute evidence of a contract between the parties until such time as a counterpart of this document has been executed by each of the parties and delivered to Bank.

4

WITNESS our hands and seals effective as of March 31, 2009.

WITNESS (to all)	BORROWER:
	VIRTUSA CORPORATION
/s/ Charles Speicher	By:	/s/ Ranjan Kalia
Charles Speicher	duly authorized Ranjan Kalia
Corporate Controller	Chief Financial Officer
	BANK:
	RBS CITIZENS, NATIONAL ASSOCIATION
/s/ Illegible	By:	/s/ Victoria Lazzell
	Victoria Lazzell, Senior Vice President

5

EXHIBIT A

Disclosure Schedule to Sixth Amendment to Amended and Restated Credit Agreement

6

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Virtusa Corporation and Subsidiaries:

We consent to the use of our reports dated May 28, 2009, with respect to the consolidated financial statements and the related financial statement schedule, and the effectiveness of internal control over financial reporting included herein in this Form 10-K.

/s/ KPMG LLP

Boston, Massachusetts

May 28, 2009

EX-31.1

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Exhibit 31.1

I, Kris Canekeratne, certify that:

1.

I have reviewed this annual report on Form 10-K of Virtusa Corporation;



2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;



3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;



4.

The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:



a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;



b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;



c)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and



d)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and



5.

The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):



a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and



b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

	By:	/s/  Kris Canekeratne
	Name:	Kris Canekeratne
	Title:	Chairman and Chief Executive Officer
Date: May 28, 2009

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Exhibit 31.1

EX-31.2

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Exhibit 31.2

I, Ranjan Kalia, certify that:

1.

I have reviewed this annual report on Form 10-K of Virtusa Corporation;



2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;



3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;



4.

The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:



a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;



b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;



c)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and



d)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and



5.

The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):



a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and



b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

	By:	/s/  Ranjan Kalia
	Name:	Ranjan Kalia
	Title:	Senior Vice President of Finance and Chief Financial Officer
Date: May 28, 2009

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Exhibit 31.2

EX-32.1

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Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Virtusa Corporation (the "Company") on Form 10-K for the period ended March 31, 2009 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Kris Canekeratne, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and



(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	By:	/s/  Kris Canekeratne
	Name:	Kris Canekeratne
	Title:	Chairman and Chief Executive Officer
Date: May 28, 2009

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Exhibit 32.1

EX-32.2

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Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Virtusa Corporation (the "Company") on Form 10-K for the period ended March 31, 2009 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Ranjan Kalia, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and



(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	By:	/s/  Ranjan Kalia
	Name:	Ranjan Kalia
	Title:	Senior Vice President of Finance and Chief Financial Officer
Date: May 28, 2009

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Exhibit 32.2