UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2007

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 000-21755

iGATE CORPORATION

(Exact name of registrant as specified in its charter)

PENNSYLVANIA	25-1802235
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1000 Commerce Drive Suite 500 Pittsburgh, PA	15275
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (412) 506-1131

Securities registered pursuant to Section 12(b) of the Act: Common Stock, $.01 par value

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  ¨    No  x

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

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, and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

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

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  ¨ Accelerated filer  x Non-accelerated filer  ¨ Smaller reporting company  ¨

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

The aggregate market value of the voting stock held by non-affiliates of the registrant as of June 30, 2007 (based on the closing price of such stock as reported by NASDAQ on such date) was $178,904,321.

The number of shares of the registrant’s Common Stock, par value $.01 per share, outstanding as of February 29, 2008 was 53,652,945 shares.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s Proxy Statement, prepared for the Annual Meeting of Shareholders scheduled for July 17, 2008 to be filed with the Commission are incorporated by reference into Part III of this report.

iGATE CORPORATION

2007 FORM 10-K

TABLE OF CONTENTS

		Page
PART I
ITEM 1.	BUSINESS	1
ITEM 1A.	RISK FACTORS	6
ITEM 1B.	UNRESOLVED STAFF COMMENTS	13
ITEM 2.	PROPERTIES	13
ITEM 3.	LEGAL PROCEEDINGS	13
ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	13
PART II
ITEM 5.	MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	14
ITEM 6.	SELECTED FINANCIAL DATA	15
ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	17
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	34
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	36
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	76
ITEM 9A.	CONTROLS AND PROCEDURES	76
PART III
ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	78
ITEM 11.	EXECUTIVE COMPENSATION	78
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS	78
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	78
ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	78
PART IV
ITEM 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	79
SIGNATURES		83

PART I

ITEM 1. BUSINESS

Overview

This Annual Report on Form 10-K (“Annual Report”) contains statements that are not historical facts and that constitute “forward-looking statements” within the meaning of such term under the Private Securities Litigation Reform Act of 1995. These forward-looking statements include our financial growth and liquidity projections as well as statements concerning our plans, strategies, intentions and beliefs concerning our business, cash flows, costs, the markets in which we operate and the sale or spin-off of the Professional Services business. Without limiting the foregoing, the words “believes,” “anticipates,” “plans,” “expects” “intends” and similar expressions are intended to identify certain forward-looking statements. These forward-looking statements are based on information currently available to us, and we assume no obligation to update these statements as circumstances change. There are risks and uncertainties that could cause actual events to differ materially from these forward-looking statements. While we cannot predict all of the risks and uncertainties, they include, but are not limited to, the proposed divestiture of the Professional Services business, our ability to predict our financial performance, the level of market demand for our services, the highly-competitive market for the types of services that we offer, the impact of competitive factors on profit margins, market conditions that could cause our customers to reduce their spending for our services, our ability to create, acquire and build new businesses and to grow our existing businesses, our ability to attract and retain qualified personnel, our ability to reduce costs and conserve cash, currency fluctuations and market conditions in India and elsewhere around the world, political and military tensions in India and South Asia, changes in generally accepted accounting principles and/or their interpretation and other risks that are discussed in the section of Item 1A of this Annual Report entitled “Risk Factors” and in other sections of this Annual Report, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”)”.

Unless otherwise indicated or the context otherwise requires, all references in this report to “iGATE”, the “Company”, “us”, “our”, or “we” are to iGATE Corporation, a Pennsylvania corporation, and its consolidated subsidiaries. iGATE Corporation, formerly named iGATE Capital Corporation, through its operating subsidiaries, is a worldwide provider of Information Technology (“IT”) and offshore outsourcing Services to large and medium-sized organizations. These services include client/server design and development, conversion/migration services, offshore outsourcing, enterprise resource planning (“ERP”) package implementation and integration services, software development and applications maintenance outsourcing.

Website Access to SEC Reports

The Company’s website is http://www.igatecorp.com. The Company’s Annual Report, Quarterly Reports on Form 10-Q, current reports on Form 8-K and any amendments to these reports are available free of charge on the Investors page of the Company’s website as soon as reasonably practicable after the reports are filed electronically with the Securities and Exchange Commission.

Business Overview

The use of offshore outsourcing for IT and Business Process Outsourcing (“BPO”) has emerged as a global trend in numerous countries and industries. Our clients recognize that offshore outsourcing is an effective way to provide high quality and cost-effective IT and BPO services.

The Company does not sell, lease or otherwise market any computer software or hardware and 100% of the Company’s revenues are derived from the sale of information technology and BPO services. IT services which we deliver using our offshore centers include software application development services and maintenance, implementation and support of enterprise application and data management and integration. We believe that we deliver to our clients high quality solutions at a substantial savings by using our global pool of highly talented people.

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Going forward, our principal strategy is to offer offshore-based IT and BPO services to our clients in various industries. Some of our current service offerings are non-IT related and include services as diverse as call centers, clinical trials management, and mortgage and claims processing. We may continue to expand our BPO service offerings through acquisitions and strategic relationships and internal initiatives. We believe that such services can be or are being performed offshore, at savings as high as 50% over U.S. labor and infrastructure costs.

The iGATE Professional Services (“iPS”) segment provides a variety of client-managed and supervised IT staffing services. These service offerings include design, development and maintenance of custom applications as well as implementation, integration and support of enterprise packaged applications such as ERP and customer relationship management (“CRM”) software provided by third party vendors such as SAP, Oracle and PeopleSoft. As discussed under the heading “Recent Events” in this Item 1, the Company plans to divest the iPS segment in 2008.

Recent Events

Divestiture of iPS Segment

On February 26, 2008, the Company announced that it plans to divest the iPS segment of its business. The Company believes that the separation of the iPS segment from the Company is a logical next step in the Company’s development, and will benefit Company shareholders, employees, and customers, as well as enable both the iPS segment and the IT/BPO services segment to be better positioned to benefit from unique business and growth opportunities.

The Company continues to evaluate the form of the divestiture, which may include a spin-off to iGATE shareholders or a sale to a third party. The Company expects to complete the divestiture in 2008; however, the completion of any transaction and its timing will depend on a number of factors, including general economic, industry and financial market conditions, as well as the ultimate form of the divestiture. The impact on the Company of divesting the iPS segment is not currently quantifiable due to these uncertainties and the potential restructuring of assets and liabilities. In addition, iPS’ historical financial information is not indicative of its future results of operations, financial position and cash flows as a stand-alone entity.

Changes to Management

On February 26, 2008, the Board of Directors of the Company approved a restructuring of the Company’s management team. Effective April 1, 2008, Phaneesh Murthy will be President and Chief Executive Officer of the Company, and Mr. Ramachandran Natesan, the current Chief Financial Officer of iGATE Global Solutions Limited (“iGS”), will replace Mike Zugay as Chief Financial Officer. Messrs. Wadhwani and Trivedi, the founders of iGATE, will continue to serve as Co-Chairmen of the Board of Directors and remain with iGATE in non-executive capacities.

Business Developments

On December 24, 2007, the Company sold jobcurry Systems Private Ltd., its wholly owned Indian offshore recruiting and training subsidiary, for approximately $1.0 million in total net cash proceeds.

During the fourth quarter of 2006, iGATE Global Solutions Limited, our majority-owned Indian subsidiary extended its Global Preferred Partnership status with General Electric Company (“GE”) through the end of 2009.

Reportable Financial Segments

We segment our business according to our service offerings. Our approach reflects the way we and our chief operating decision makers analyze and manage our businesses. The composition of segments and measure of

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segment profitability is consistent with that used by our management. Please refer to segment reporting in Note 16 to our Consolidated Financial Statements which details the financial results of each principal business segment as well as revenues and assets by geographic region.

The following are brief descriptions of each of our segments.

iGATE Solutions

The iGATE Solutions segment’s (“iGATE Solutions”) service offerings include outsourcing of IT and BPO services using an onsite / offshore delivery model. The terms “on-site” and “offshore” will be used during our discussions of iGATE Solutions’ operations in our MD&A. Onsite refers to work performed in the U.S. for our clients. Offshore refers to worked performed in India for our clients. The ratio of onsite/offshore work performed has a significant impact on iGATE Solutions profitability. Our iGATE Solutions segment is more profitable when a higher percentage of work is performed in India (“offshore”), due to lower labor costs. This delivery model helps clients achieve greater cost effectiveness. The operations of iGS are included in the iGATE Solutions Segment.

IT services offered include enterprise data management and data warehousing, business intelligence and analytics, design, development, system integration, package evaluation and implementation, re-engineering and maintenance.

BPO services offered include call center services and transaction processing services. The call center services are offered to clients in several industries and are not industry specific. The transaction processing services offered are focused on the mortgage banking, insurance and capital market industries, except for the delivery of finance and accounting functions such as accounts payable which can be performed for clients across all industries.

iGATE Solutions has offshore development centers (“ODCs”) located in Bangalore, Hyderabad, Chennai, Delhi, and Pune, India. The centers can deliver both near shore (“work performed primarily at the client site”) and offshore services, dependent upon customer location and expectations. iGATE Solutions operates in India, Canada, the U.S., Europe, Singapore, Malaysia, Japan and Australia.

The iGATE Solutions segment revenues are derived through iGS. Our iGATE Solutions segment has approximately 6,260 employees.

The majority of our clients in the iGATE Solutions segment have headquarters in the U.S. and operate internationally. The operations of iGS are included in the iGATE Solutions segment.

The iGATE Solutions segment markets its service offerings to large and medium-sized organizations. Certain contracts are based upon a fixed price with payment based upon deliverables and/or project milestones reached. Certain contracts are time-and-materials based where contract payments are based on the number of consultant hours worked on the project. Customers typically have the right to cancel contracts with minimal notice. Certain contracts with no stated deliverables, with a designated workforce assigned, recognize revenues on a straight-line basis over the life of the contract. Contracts with deliverables or project milestones can provide for certain penalties if the deliverables or project milestones are not met within contract timelines.

The iGATE Solutions segment services customers in a wide range of industries. The segment’s largest customer is GE which accounted for 25%, 30% and 35% of its revenues for the years ended December 31, 2007, 2006 and 2005, respectively. iGS renewed its Global Preferred Partnership status with GE through 2009.

On November 13, 2007, the iGS shareholders approved the delisting of iGS from the Bombay Stock Exchange, the National Stock Exchange, and the Bangalore Stock Exchange. To effect the delisting, iGATE

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purchased a portion of the publicly held minority interest in iGS. The delisting was consummated on February 4, 2008. The final exit price for the delisting was approximately $10.40 per share (arrived at through a reverse book-building process), and as of December 31, 2007, iGS is a 93.4% privately owned subsidiary of the Company.

iGATE Professional Services

The iPS segment provides a variety of client-managed and supervised IT staffing services. These service offerings include design, development and maintenance of custom applications as well as implementation, integration and support of enterprise packaged applications such as ERP and CRM software provided by third party vendors such as SAP, Oracle and PeopleSoft.

The iPS segment markets its services to application development managers and information technology directors within prospective customers’ companies. The iPS segment also responds to requests for proposals in order to obtain preferred vendor status to secure long-term engagement relationships. iPS contracts provide for payments on a time-and-materials basis, based on the number of consultant hours worked on the project. Clients typically have the right to cancel contracts with minimal notice.

The iPS segment serves a wide variety of customers in numerous industries in the U.S. The segment’s largest customers are TEKsystems, Inc. and International Business Machine Corporation (“IBM”) which account for approximately 12% each of iPS revenues in 2007. In 2006, TEKsystems, Inc. and IBM accounted for approximately 13% and 11% of iPS revenues. The segment’s largest customers in 2005 were IBM and Wachovia Bank, which accounted for approximately 22% and 11% of iPS revenues. iPS has approximately 780 employees.

On February 26, 2008, the Board of Directors of the Company approved the divestiture of the iPS segment, either through a spin-off to the current shareholders of the Company or through a sale of the iPS segment to a third-party buyer. The Company has retained Credit Suisse LLC to assist it with strategic counsel regarding the divestiture.

iGATE Shared Services (formerly “iGATE Corporate”)

The iGATE Shared Services segment includes the operations iGATE Clinical Research International Inc., formerly known as iGATE Clinical Research Management, Inc., iGATE Clinical Research International Private Ltd., corporate and other unallocated costs. iGATE Clinical Research International Inc. and iGATE Clinical Research International Private Ltd. contract with pharmaceutical companies to conduct offshore clinical trials on their behalf. These entities are excluded from the above segments due largely to their dissimilar service offerings and certain economic characteristics. This segment has approximately 100 employees.

Accounting Policies

The accounting policies of the segments are the same as those described in the summary of significant accounting policies in Note 1 to the notes to the Consolidated Financial Statements. We evaluate segment performance based upon profit or loss from operations. We do not allocate income taxes, other income or expense, equity in losses of affiliated companies, minority interest and loss on venture investments and affiliated companies. In addition, we account for inter-segment sales and transfers at current market prices. All inter-segment sales have been eliminated in consolidation.

Seasonality

Our operations are generally not affected by seasonal fluctuations. However, our consultants’ billable hours are affected by national holidays and vacation policies, which vary by country and by operating company.

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Competition

The IT services and offshore outsourcing services industries are highly competitive, and are served by numerous global, national, regional and local firms. Primary competitors in the IT industry include participants from a variety of market segments, including the major consulting firms, systems consulting and implementation firms, Internet services and consulting companies, applications software firms, India based offshore outsourcing companies, service groups of computer equipment companies, general management consulting firms, programming companies and temporary staffing firms. We believe that the principal competitive factors in the IT services and offshore outsourcing markets include the range of services offered, size and scale of service provider, global reach, technical expertise, responsiveness to client needs, speed in delivery of IT solutions, quality of service and perceived value. Competition for acquisition candidates, as well as for clients and strategic relationships, may also develop among subsidiaries of iGATE or between iGATE and one or more of our operating subsidiaries or other companies in which we have equity investments.

Our Partner Companies and Affiliates

The following is a listing as of February 29, 2008 of all of our principal operating subsidiaries and affiliates, including the percentage of our ownership in each of these companies:

Subsidiary www.igatecorp.com	Segment www.igatecorp.com	Business Description	Percentage Owned by iGATE
iGATE Mastech, Inc.	iGATE Professional Services	Custom application and design services	100	%
Global Financial Services of Nevada, Inc.	iGATE Professional Services	Co-managed projects—U.S.	100	%
RPOworldwide, Inc.	iGATE Professional Services	Recruiting	100	%
TAC, Staffing Services India Private Ltd.	iGATE Professional Services	Custom application and design services	50	%
iGATE Clinical Research International Private Limited	iGATE Shared Services	Offshore clinical research	95	%
iGATE Clinical Research International Inc.	iGATE Shared Services	Clinical Research—U.S.	100	%
iGATE Global Solutions Limited	iGATE Solutions	Offshore outsourcing services	93.4	%
Software AG (India) Private Ltd.(1)	iGATE Solutions	Application development and professional services	47	%

(1) Ownership adjusted for minority interest ownership by iGS shareholders.

All of our ownership positions set forth in the chart in this Item 1 have been calculated based on the issued and outstanding common stock or membership interests, as the case may be, of each company/entity, assuming the issuance of common stock on the conversion or exercise of preferred stock and convertible notes, but excluding the effect of unexercised options, warrants and unvested restricted stock. These ownership positions may be adjusted or modified as a result of the divestiture of the iPS segment.

Intellectual Property Rights

We rely upon a combination of nondisclosure and other contractual arrangements and trade secrets, copyright and trademark laws to protect our proprietary rights and the proprietary rights of third parties from whom we license intellectual property. We enter into confidentiality agreements with our employees and limit the distribution of proprietary information. There can be no assurance that the steps we take in this regard will be adequate to deter misappropriation of proprietary information or that we will be able to detect unauthorized use and take appropriate steps to enforce our intellectual property rights.

Generally, all software that we develop in connection with a client engagement is typically assigned to the client.

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Human Resources

Our success depends in large part on our ability to attract, develop, motivate and retain highly skilled IT professionals. We recruit in a number of countries, including India, the United States, Canada, Bulgaria, Costa Rica, the United Kingdom, Singapore, Australia and the Philippines. We advertise in newspapers and trade magazines. In addition, our employees are a valuable recruiting tool and are actively involved in referring new employees and screening candidates for new positions.

We have a focused retention strategy that includes career planning, training, benefits and an incentive plan. Our benefits package includes subsidized health insurance, a 401(k) plan, group life insurance and a long-term disability plan. We intend to continue to use stock options and restricted stock grants as part of our recruitment and retention strategy. We also have a training infrastructure. We train employees on a variety of platforms and help them transition from legacy to advanced architecture skills by providing cross-platform training in new technologies. We have implemented an Intranet to allow our employees to access our courseware and computer-based training modules via the Internet so that the training is available to all employees worldwide at their individual convenience and pace.

At December 31, 2007, iGATE (including its operating subsidiaries) had approximately 7,140 non-unionized employees comprised of approximately 6,450 IT professionals (including subcontractors) and approximately 690 individuals working in sales, recruiting, general and administrative roles. As of December 31, 2007, approximately 36% of our U.S. workforce was working under H-1B temporary work permits in the United States. We believe that our relationships with our employees are good.

ITEM 1A. RISK FACTORS

Our New Business Strategy is Unproven

In 2003, we significantly reorganized our business to reflect our business strategy to increase the focus of our offshore delivery business in India and to expand our offshore business to BPO services, including non-IT related BPO services, and there is no guarantee that this reorganization will be successful. In furtherance of this strategy, the Board has approved the divestiture of the iPS segment. If such divestiture is consummated, the Company will be solely a IT/BPO company, with iGS’ business comprising substantially all of the Company’s operations. The success of our new business strategy depends in part on the ability of the iGATE companies to work collaboratively, share information and leverage their collective resources to optimize strategic opportunities and our ability to effectively identify non-IT related BPO services and deliver cost effective solutions. We cannot be certain that this strategy will improve our performance, and it is possible that the strategy will detract from our performance. If we cannot convince potential strategic partners of the value of our business model, our ability to acquire new companies and businesses may be adversely affected and our strategy for continued growth may not succeed.

Recruitment and Retention of IT Professionals

Our business involves the delivery of professional services and is labor-intensive. Our success depends upon our ability to attract, develop, motivate and retain highly skilled IT professionals and project managers who possess the technical skills and experience necessary to deliver our services. Qualified IT professionals are in demand worldwide and are likely to remain a limited resource for the foreseeable future. There can be no assurance that qualified IT professionals will be available to us in sufficient numbers, or that we will be successful in retaining current or future employees. Failure to attract or retain qualified IT professionals in sufficient numbers may have a material adverse effect on our business, operating results and financial condition. Historically, we have done much of our recruiting outside of the countries where the client work is performed. Accordingly, any perception among our IT professionals, whether or not well founded, that our ability to assist them in obtaining temporary work visas and permanent residency status has been diminished, could lead to significant employee attrition.

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Government Regulation of Offshore Outsourcing

Some organizations have expressed concerns about a perceived association between offshore outsourcing and the loss of jobs in the United States. Some U.S. states have enacted legislation restricting government agencies from outsourcing their back office processes and IT solutions work to companies outside the United States. It is also possible that U.S. private sector companies that work with these states may be restricted from outsourcing their work related to government contracts. We currently do not have significant contracts with U.S. federal or state government entities, however, there can be no assurance that these restrictions will not extend to private companies, such as our clients. Any changes to existing laws or the enactment of new legislation restricting offshore outsourcing may adversely impact our ability to do business in the United States, particularly if these changes are widespread.

Government Regulation of Immigration

We recruit IT professionals on a global basis and, therefore, must comply with the immigration laws in the countries in which we operate, particularly the United States. As of December 31, 2007 approximately 36% of our U.S. workforce were working under H-1B temporary work permits in the United States. Statutory law limits the number of new H-1B petitions that may be approved in a fiscal year, and if we are unable to obtain H-1B visas for our employees in sufficient quantities or at a sufficient rate for a significant period of time, our business, operating results and financial condition could be adversely affected. On October 1, 2003, the H-1B visa annual quota reverted to 65,000 from 195,000 because the increase in the “American Competitiveness in the Twenty-First Century Act” was for a three-year period. As a result, the quota for fiscal year 2004 was exhausted in mid-February of 2004. The quota for fiscal year 2005 was fully allocated in early October of 2004. The quota for fiscal year 2006 was fully allocated on October 1, 2005. The H-1B quotas for fiscal years 2007 and 2008 were consumed in a single day. Less than half of the fiscal year 2008 H-1B visa petitions were accepted because of the quota restriction.

On December 8, 2004, the President signed the “H-1B Reform Act of 2004”. This legislation provides for up to an additional 20,000 H-1B visas per year provided that the H-1B worker possesses at least a Masters degree awarded by a U.S. college or university. Historically, the iGATE operating companies have hired few H-1B workers with this educational profile.

The “H-1B Reform Act of 2004” also reinstated the “H-1B Dependent” attestations and the penalties for their noncompliance. The legislation also reinstated the special H-1B training-filing fee and increased the amount to $1,500 and created a new $500 fraud detection and prevention fee.

In recent years, approximately 99% of our H-1B hires were not subject to the annual quota because they were already in the U.S. in H-1B visa status with another employer. As a result, the negative impact on recruiting of the exhaustion of the fiscal years 2004—2008 H-1B quotas was not substantial. However, unless Congress substantially increases the annual H-1B quota, the pool of H-1B workers in the U.S. who were charged against previous years’ quotas will decline. Such a development would make H-1B worker recruiting more difficult. Absent positive legislation, in the long-term the pool of available H-1B workers in the U.S. that are not subject to the annual quota may eventually be depleted.

Variability of Quarterly Operating Results

The revenues and operating results of many of the iGATE companies are subject to significant variations from quarter to quarter depending on a number of factors, including the timing and number of client projects commenced and completed during the quarter, the number of working days in a quarter, employee hiring, attrition and utilization rates and the mix of time-and-materials projects versus proportional performance and maintenance projects during the quarter. Certain of the iGATE companies recognize revenues on time-and-materials projects as the services are performed, while revenues on proportional performance projects

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are recognized using the proportional performance method. Certain contracts with no stated deliverables, with a designated workforce assigned, recognize revenues on a straight-line basis over the life of the contract. Although proportional performance projects have not contributed significantly to revenues and profitability to date, operating results may be adversely affected in the future by cost overruns on proportional performance projects. Because a high percentage of the expenses of many of the iGATE companies are relatively fixed, variations in revenues may cause significant variations in operating results. Additionally, the iGATE companies periodically incur cost increases due to both the hiring of new employees and strategic investments in infrastructure in anticipation of future opportunities for revenue growth.

Increasing Significance of Non-U.S. Operations and Risks of International Operations

Our international consulting and offshore software development depend greatly upon business immigration and technology transfer laws in those countries, and upon the continued development of technology infrastructure. There can be no assurance that our international operations will be profitable or support our growth strategy. The risks inherent in our international business activities include:

• unexpected changes in regulatory environments;

• foreign currency fluctuations;

• tariffs and other trade barriers;

• difficulties in managing international operations; and

• the burden of complying with a wide variety of foreign laws and regulations.

Our failure to manage growth, attract and retain personnel, manage major development efforts, profitably deliver services, or a significant interruption of our ability to transmit data via satellite, could have a material adverse impact on our ability to successfully maintain and develop our international operations and could have a material adverse effect on our business, operating results and financial condition.

Exposure to Regulatory and General Economic Conditions in India

Our subsidiary iGS utilizes offshore software development centers based in Bangalore, Chennai, Hyderabad, Pune and Noida, India. iGS also operates recruiting and training centers in India. The Indian government exerts significant influence over its economy. In the recent past, the Indian government has provided significant tax incentives and relaxed certain regulatory restrictions in order to encourage foreign investment in certain sectors of the economy, including the technology industry. Certain of these benefits that directly affect us include, among others, tax holidays (temporary exemptions from taxation on operating income), liberalized import and export duties and preferential rules on foreign investment and repatriation. To be eligible for certain of these tax benefits, we must continue to meet certain conditions. A failure to meet such conditions in the future could result in the cancellation of the benefits. There can be no assurance that such tax benefits will be continued in the future at their current levels. Following the divestiture of the Company’s iPS segment, iGS’ business will comprise substantially all of the Company’s operations—therefore, the Company’s exposure to regulatory and economic conditions will be greater and a change in the business or regulatory climate of India may be more likely to have a material adverse effect on our business, operating results and financial condition.

Our wage costs in India have historically been significantly lower than wage costs in the United States and Europe for comparably skilled professionals, and this has been one of our competitive advantages. However, wage increases in India may prevent us from sustaining this competitive advantage and may negatively affect our profit margins. We may need to increase the levels of our employee compensation more rapidly than in the past to retain talent. Unless we are able to continue to increase the efficiency and productivity of our employees, wage increases in the long term may reduce our profit margins.

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Risks Associated with Covenants in Certain Financing Instruments

On August 22, 2007 we renewed our $35.0 million unsecured credit facility (“the PNC Facility”) with PNC Bank, N.A (“PNC”) for 365 days effective September 13, 2007. The PNC Facility contains restrictive covenants that require us to meet certain financial criteria on a quarterly basis. In order to effect the delisting of iGS from the public stock exchange in India, the Company to date has transferred approximately $66 million in cash from the USA to India for the repurchase of shares from the public shareholders of iGS. This transfer of cash resulted in a violation of a financial covenant under the PNC Facility. The Company was granted a waiver by PNC and the current waiver extends through March 31, 2008. We may not be able to continue to satisfy the financial covenants in these documents. If we cannot satisfy such covenants and we are not able to renegotiate the terms and conditions thereof, we may not have access to funds under the PNC Facility. Currently, the most restrictive covenant is the requirement to maintain an aggregate of $35 million in domestic cash and cash equalivants at all times during the term of the PNC Facility. In addition, the PNC Facility requires a minimum of $100 million of Tangible Net Worth and a liquidity ratio of not less than 1.5 to 1.0. The liquidity ratio is the sum of domestic cash and accounts receivable divided by total liabilities. iGS cannot borrow funds under the PNC Facility.

Intense Competition in the IT and Offshore Outsourcing Services Industries

The IT and offshore outsourcing services industries are highly competitive and served by numerous global, national, regional and local firms. Primary competitors include participants from a variety of market segments, including the major consulting firms, systems consulting and implementation firms, India based offshore outsourcing services, applications software firms, service groups of computer equipment companies, specialized interest consulting firms, programming companies and temporary staffing firms. Many of these competitors have substantially greater financial, technical and marketing resources and greater name recognition than we have. There are relatively few barriers to entry into our markets and we may face additional competition from new entrants into our markets. In addition, there is a risk that clients may elect to increase their internal resources to satisfy their applications solutions needs. Further, the IT services industry is undergoing consolidation, which may result in increasing pressure on margins. These factors may limit our ability to increase prices commensurate with increases in compensation. There can be no assurance that we will compete successfully with existing or new competitors in the IT and offshore outsourcing services markets.

iGATE Companies May Compete with Each Other

iGATE Companies may compete with each other for customers, talented employees and strategic relationships and for acquisition opportunities in the IT and offshore outsourcing services industries. Such competition may make it more difficult or costly for iGATE Corporation or other iGATE companies to enter into strategic relationships, negotiate acquisitions or conduct business.

Risks Related to Inability to Acquire Additional Businesses

We plan to gradually continue to expand our operations through the acquisition of, or investment in, additional businesses and companies. We may be unable to identify businesses that complement our strategy for growth. If we do succeed in identifying a company with such a business, we may not be able to proceed to acquire the company, its relevant business or an interest in the company for many reasons, including:

• a failure to agree on the terms of the acquisition or investment;

• incompatibility between the Company and the management of the company which we wish to acquire or invest;

• competition from other potential acquirors;

• a lack of capital to make the acquisition or investment; and

• the unwillingness of the company to partner with us.

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If we are unable to continue acquiring and investing in attractive businesses, our strategy for growth may not succeed.

Risks Related to the Divestiture of iPS

On February 26, 2008, the Board of Directors of the Company approved the divestiture of the iPS segment, either through a spin-off to the current shareholders of the Company or through a sale of the iPS segment to a third-party buyer. In the judgment of the Board of Directors, the Company will provide greater value to its shareholders as a focused IT/BPO company, but there can be no assurance that the Company will be able to continue to profitably manage the iGS segment as a standalone business or successfully complete the divestiture of the iPS segment without substantial expenses, delays, or other operational or financial problems. In addition, the restructuring process may involve special risks, such as the diversion of management’s attention and unanticipated events and circumstances. Some of all of these performance issues could have a material adverse effect on our business, and performance problems at iPS, once divested, could have a material adverse effect on the Company’s reputation as a whole. A failure to manage the divestiture and related restructuring successfully could have a material adverse effect on our business, operating results and financial condition.

Risks Related to Completed Acquisitions

There can be no assurance that we will be able to profitably manage additional businesses or successfully integrate any acquired businesses without substantial expenses, delays or other operational or financial problems. Further, acquisitions may involve a number of special risks, including diversion of management’s attention, failure to retain key acquired personnel, unanticipated events or circumstances and legal liabilities and amortization of acquired intangible assets, some or all of which could have a material adverse effect on our business, operating results and financial condition. Client satisfaction or performance problems at a single acquired firm could have a material adverse impact on our reputation as a whole. In addition, there can be no assurance that acquired businesses, if any, will achieve anticipated revenues and earnings. Our failure to manage our acquisition strategy successfully could have a material adverse effect on our business, operating results and financial condition.

Risks Associated with Capital Markets

We currently hold interests in non wholly-owned companies. While we generally do not anticipate selling such interests, if we were to divest all or part of them, we might not receive maximum value for these interests. With respect to such entities with publicly traded stock, we may be unable to sell our interest at then quoted market prices. Furthermore, for those entities that do not have publicly traded stock, the realizable value of our interest may ultimately prove to be lower than the carrying value currently reflected in our Consolidated Financial Statements. Due to market conditions, it may be difficult for private companies in which we have invested to undertake public offerings.

Impairment Analysis May Lead to Recognition of Losses

The carrying amount of the goodwill on our balance sheet was $36.6 million as of December 31, 2007. We periodically assess the potential impairment of our long-lived assets, such as goodwill, as appropriate. If, as a result of such an assessment, we were to determine that the carrying amount of this goodwill was not recoverable, we would reduce the carrying amount in the period in which the determination was made. Any reduction would result in the recognition of a one-time impairment loss, which would have an adverse effect on our financial results in the period in which the loss was recognized.

The carrying amount of our investments in unconsolidated affiliates was $1.0 million as of December 31, 2007. If we were to determine that the value of such investments had declines judged to be permanent or other than temporary, we would reduce the carrying amount of the investments. Any reduction would result in the recognition of a one-time impairment loss, which would have an adverse effect on our financial results in the period in which the loss was recognized.

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Concentration of Revenues; Risk of Termination

Our revenues are highly dependent on clients primarily located in the United States, as well as clients concentrated in certain industries, and economic slowdowns, changes in U.S. law and other restrictions or factors that affect the economic health of these industries may affect our business. In the year ended December 31, 2007, approximately 83% of our revenues were derived from North America. Consequently, if our clients reduce or postpone their IT spending significantly, this may lower the demand for our services and negatively affect our revenues and profitability. Further, any significant decrease in the growth of the financial services or other industry segments on which we focus may reduce the demand for our services and negatively affect our revenues and profitability.

We have in the past derived, and may in the future derive, a significant portion of our revenues from a relatively limited number of clients. Our five largest clients represented approximately 41%, 38% and 42% of revenues for the years ended December 31, 2007, 2006 and 2005, respectively. In the years ended December 31, 2007, 2006 and 2005, GE accounted for 16%, 18% and 18% of our revenues, respectively. Most of our projects are terminable by the client without penalty. An unanticipated termination of a major project could result in the loss of substantial anticipated revenues and could require us to maintain or terminate a significant number of unassigned IT professionals, resulting in a higher number of unassigned IT professionals and/or significant termination expenses. The loss of any significant client or project could have a material adverse effect on our business, operating results and financial condition.

Rapid Technological Change; Dependence on New Solutions

The IT and offshore outsourcing services industries are characterized by rapid technological change, evolving industry standards, changing client preferences and new product introductions. Our success will depend in part on our ability to develop IT solutions that keep pace with industry developments. There can be no assurance that we will be successful in addressing these developments on a timely basis or that, if these developments are addressed, we will be successful in the marketplace. In addition, there can be no assurance that products or technologies developed by others will not render our services noncompetitive or obsolete. Our failure to address these developments could have a material adverse effect on our business, operating results and financial condition.

A significant number of organizations are attempting to migrate business applications to advanced technologies. As a result, our ability to remain competitive will be dependent on several factors, including our ability to develop, train and hire employees with skills in advanced technologies. Our failure to hire, train and retain employees with such skills could have a material adverse impact on our business. Our ability to remain competitive will also be dependent on our ability to design and implement, in a timely and cost-effective manner, effective transition strategies for clients moving to advanced architectures. Our failure to design and implement such transition strategies in a timely and cost-effective manner could have a material adverse effect on our business, operating results and financial condition.

Dependence on Principals

Our success is highly dependent on the efforts and abilities of our founders, Sunil Wadhwani and Ashok Trivedi and our senior management team, including Phaneesh Murthy, currently Chief Executive Officer of iGS and Steve Shangold, currently Chief Executive Officer of iGATE Mastech, Inc. Although each executive has entered into employment agreements containing noncompetition, nondisclosure and nonsolicitation covenants, these contracts do not guarantee that they will continue their employment with us or that such covenants will be enforceable. The loss of the services of either of any of these key executives for any reason could have a material adverse effect on our business, operating results and financial condition.

Risk of Preferred Vendor Contracts

We are party to several “preferred vendor” contracts and we are seeking additional similar contracts in order to obtain new or additional business from large or medium-sized clients. Clients enter into these contracts to

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reduce the number of vendors and obtain better pricing in return for a potential increase in the volume of business to the preferred vendor. While these contracts are expected to generate higher volumes, they generally result in lower margins. Although we attempt to lower costs to maintain margins, there can be no assurance that we will be able to sustain margins on such contracts. In addition, the failure to be designated a preferred vendor, or the loss of such status, may preclude us from providing services to existing or potential clients, except as a subcontractor, which could have a material adverse effect on our business, operating results and financial condition.

Risks Associated with Intellectual Property Rights

Our success depends in part upon certain methodologies and tools we use in designing, developing and implementing applications systems and other proprietary intellectual property rights. We rely upon a combination of nondisclosure and other contractual arrangements and trade secrets, copyright and trademark laws to protect our proprietary rights and the proprietary rights of third parties from whom we license intellectual property. We enter into confidentiality agreements with our employees and limit distribution of proprietary information. There can be no assurance that the steps we take in this regard will be adequate to deter misappropriation of proprietary information or that we will be able to detect unauthorized use and take appropriate steps to enforce our intellectual property rights.

Although we believe that our services do not infringe on the intellectual property rights of others and that we have all rights necessary to utilize the intellectual property employed in our business, we are subject to the risk of litigation alleging infringement of third-party intellectual property rights. Any claims, whether or not meritorious, could:

• be expensive and time-consuming to defend;

• cause significant installation delays;

• divert management’s attention and resources; and/or

• require us to enter into royalty or licensing arrangements, which may not be available on acceptable terms, or may not be available at all.

A successful claim of product infringement against us or our failure or inability to license the infringed or similar technology could have a material adverse effect on our business, financial condition and results of operations.

Fixed-Price Projects

We undertake certain projects billed on a fixed-price basis. We recognize revenue from these contracts on a proportional performance basis, which is different from our principal method of billing, the time-and-materials basis. Failure to complete such projects within budget would expose us to risks associated with cost overruns, which could have a material adverse effect on our business, operating results and financial condition.

Potential Liability to Clients

Many of our engagements involve projects that are critical to the operations of our clients’ businesses and provide benefits that may be difficult to quantify. Although we attempt to contractually limit our liability for damages arising from errors, mistakes, omissions or negligent acts in rendering our services, there can be no assurance that our attempts to limit liability will be successful. Our failure or inability to meet a client’s expectations in the performance of our services could result in a material adverse change to the client’s operations and therefore could give rise to claims against us or damage our reputation, adversely affecting our business, operating results and financial condition.

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ITEM 1B. UNRESOLVED STAFF COMMENTS

As part of a periodic review by the Division of Corporation Finance of the Securities and Exchange Commission (“SEC”) of our Annual Report on Form 10-K for the year ended December 31, 2006, we received and responded to a number of comments. The only comments that remain unresolved pertain to the SEC’s request that we further explain certain omissions made in the Form 10-K that we consider immaterial regarding our revenue growth. On March 5, 2008, the Company responded to the SEC’s request for additional explanation and clarification.

ITEM 2. PROPERTIES

Information regarding the principal properties owned and leased by the Company and its subsidiaries as of December 31, 2007 is set forth below:

Location	Segment	Principal Use	Approximate Square Footage
Pittsburgh, Pennsylvania	iGATE Shared Services /iPS	Corporate headquarters, management administration, human resources, sales, and marketing	30,000
Chennai, India	iGATE Solutions	iGS offshore development center	100,000
Bangalore, India	iGATE Solutions	iGS Whitefield campus and offshore development center	412,000
Hyderabad, India	iGATE Solutions	iGS offshore development center	63,000
Noida, India	iGATE Solutions	iGATE Global Process Outsourcing Ltd.	80,000

In addition to the properties listed above, the Company and its subsidiaries lease sales offices in many IT services markets in the United States and throughout the world. These locations allow the Company to respond quickly to the needs of its clients and to recruit qualified IT professionals in these markets.

ITEM 3. LEGAL PROCEEDINGS

In the ordinary course of our business, we are involved in a number of lawsuits and administrative proceedings. While uncertainties are inherent in the final outcome of these matters, Company management believes, after consultation with legal counsel, that the disposition of these proceedings should not have a material adverse effect on our financial position, results of operations or cash flows. Certain proceedings are more fully discussed in Contingencies Note 9 to our Consolidated Financial Statements.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted to a vote of shareholders during the fourth quarter of 2007.

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PART II

ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our Common Stock is traded on the NASDAQ National Market under the ticker symbol “IGTE”. The following table sets forth, for the periods indicated, the range of high and low closing sale prices for iGATE Corporation Common Stock as reported on the NASDAQ National Market.

	High		Low
2007
First Quarter	$	8.70	$	6.31
Second Quarter		8.39		6.58
Third Quarter		9.99		7.26
Fourth Quarter	$	10.16	$	6.66
2006
First Quarter	$	6.72	$	4.70
Second Quarter		7.25		5.63
Third Quarter		6.16		3.74
Fourth Quarter	$	6.89	$	4.97

On February 29, 2008, we had 146 registered holders of record of our Common Stock.

We are prohibited from paying dividends under the PNC Facility. See Credit Facilities Note 7 to our Consolidated Financial Statements.

We currently have no program regarding the purchase of our Common Stock.

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ITEM 6. SELECTED FINANCIAL DATA

	Year Ended December 31,
	2007			2006			2005			2004			2003
	(in thousands, except per share data)
Income Statement Data(1):
Revenues	$	307,258		$	283,588		$	275,992		$	264,585		$	240,634
Gross margin		89,009			73,376			70,882			67,008			68,980
Gain on sale of land		—			—			—			(3,615	)		—
Restructuring charges (recovery)(2)		769			(3,062	)		(481	)		5,805			604
Goodwill impairment(3)		1,950			—			—			—			—
Income (loss) from operations		14,848			6,818			3,880			(17,261	)		(4,560	)
Other income (expense), net		6,038			3,992			(275	)		1,374			1,560
Equity in income (losses) of affiliated companies		29			317			338			(335	)		(99	)
Minority interest		(2,992	)		(752	)		(261	)		(677	)		(312	)
Gain on sale of stock of subsidiary		136			—			5,549			—			—
(Loss) gain on venture investments and affiliated companies, net(4)		(193	)		578			(2,149	)		—			(28	)
Income (loss) before income taxes		17,866			10,953			7,082			(16,899	)		(3,439	)
Income tax provision		2,281			2,249			113			5,130			2,179
Income (loss) from continuing operations		15,585			8,704			6,969			(22,029	)		(5,618	)
Income (loss) from discontinued operations, net of income taxes(1)		—			—			—			3,818			(3,402	)
Net income (loss)	$	15,585		$	8,704		$	6,969		$	(18,211	)	$	(9,020	)
Earnings (loss) from continuing operations per share		0.29			0.16			0.13			(0.42	)		(0.11	)
Earnings (loss) from discontinued operations per share		—			—			—			0.07			(0.07	)
Net earnings (loss) per common share, basic and diluted	$	0.29		$	0.16		$	0.13		$	(0.35	)	$	(0.17	)
Weighted average common shares, basic		53,333			52,939			52,530			52,721			51,697
Weighted average common shares, diluted		53,972			53,278			52,734			52,721			51,697
Balance Sheet Data:
Cash and cash equivalents	$	49,684		$	52,154		$	45,837		$	28,201		$	36,133
Short-term investments		25,295			31,826			30,798			35,863			39,582
Working capital(5)		95,766			113,387			102,327			93,846			101,293
Total assets		215,924			190,774			177,474			180,232			180,940
Total shareholders’ equity	$	155,966		$	133,351		$	117,672		$	111,700		$	122,135

(1) In June 2004, we sold our subsidiary located in Sydney, Australia, iGATE Australia Pty. Ltd. (“iGATE Australia”). In April 2004, we sold our subsidiary located in Edinburgh, Scotland, Direct Resources Scotland Ltd. (“DRI”). As required under accounting rules, dispositions are presented as discontinued operations, net of applicable statutory taxes.

(2) In 2007, we incurred $0.8 million related to the restructuring of our Shared Services segment. In 2006, we reversed $0.6 million of our 2001 restructuring reserve. In 2006, we also reversed $2.5 million of our 2004 restructuring reserve related to our United Kingdom operation. In 2005, we sold Canada, and reversed $0.5 million of previously recorded restructuring charges that we associated with our 2001 and 2004 Canada restructurings. In 2004, we incurred $5.8 million in connection with our restructuring of our United Kingdom and Canadian operations. In 2003, we revised our restructuring estimates and incurred an additional $0.6 million in connection with our 2002 restructuring plan.

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(3) In 2007, we incurred $2.0 million in total charges related to goodwill impairment in our iGATE Solutions reporting unit.

(4) In 2007, we recorded an impairment charge on our investment in Concours in the amount of $0.6 million, which was offset by a gain of $0.4 million from an escrow account related to a prior sale of a business. In 2006, we sold our investment in Brainbench for $0.6 million. In 2005, we recorded an impairment charge on our investment in Concours in the amount of $2.4 million, which was offset by a gain of $0.3 million on the remaining shares of stock of ScanSoft (f/n/a Speechworks, Inc.)

(5) Working capital represents current assets less current liabilities.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

iGATE Corporation, formerly named iGATE Capital Corporation, through its operating subsidiaries, is a provider of IT and offshore outsourcing services to large and medium-sized organizations. From inception and through February 2000, we conducted the majority of our business under the name of Mastech Corporation through our wholly owned subsidiary Mastech Systems Corporation, a Pennsylvania corporation that was formed in July 1986.

In March 2000, we transferred substantially all of the assets of Mastech Systems Corporation to subsidiary operating companies.

The Company does not sell, lease or otherwise market any computer software or hardware and 100% of the Company’s revenues are derived from the sale of information technology and BPO services. Our operating subsidiaries provide clients with a source for a broad range of IT applications solutions and offshore outsourcing services including: client/server design and development, conversion/migration services, ERP package implementation and integration services, software development services and applications maintenance outsourcing.

Critical Accounting Policies

The following explains our most critical accounting policies. See Note 1 to our Consolidated Financial Statements set forth on pages 44 to 51 of this Form 10-K for a complete description of our significant accounting policies.

Revenue Recognition

We recognize revenue on time-and-materials contracts as the services are performed. Time-and-materials contracts typically bill at an agreed upon hourly rate. Revenue is earned when our consultants are working on projects. Revenue recognition is negatively impacted by holidays and consultant vacation and sick days. We also have fixed price arrangements with certain customers. A price for an entire project is agreed upon for a predetermined fee before the project starts. We recognize revenues on fixed-price contracts using the proportional performance method. We prepare a budget for each fixed price project, and based upon the budget that we prepare, we estimate what our costs should be. We determine performance by comparing the actual cost of work performed to date to the estimated total cost for each contract. We recognize revenue based upon costs incurred by our consultants during the period. The Company follows this revenue recognition method for fixed-price contracts because there is a direct and consistent relationship between the service patterns and services provided to the customer and the direct costs incurred to provide such services. If our cost estimates indicate a loss on a particular fixed price contract, we record a provision for the estimated loss without regard to the stage of completion. Changes in job performance, conditions and estimated profitability may result in revisions to costs and revenues and are recognized in the period in which the changes are identified. Certain contracts with no stated deliverables, with a designated workforce assigned, recognize revenues on a straight-line basis over the life of the contract. Revenue on these contracts is ratable and predetermined based upon the negotiated contract.

Accounts Receivable and Allowance for Uncollectible Accounts

We extend credit to clients based upon management’s assessment of their creditworthiness. The majority of our revenues (and the resulting accounts receivable) are from large companies and major systems integrators.

Unbilled receivables represent amounts recognized as revenues for the periods presented based on services performed in accordance with the terms of client contracts that will be invoiced in subsequent periods.

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We review accounts receivable periodically to determine the probability of loss. The allowance for uncollectible accounts is determined using the combination of the specific identification method for balances deemed uncollectible, as well as judgments made by us based upon historical and expected charge-off experience. If the financial condition of our customers deteriorates or if economic conditions worsen, additional allowances may be necessary, which may impact earnings.

Investments

The Company accounts for its investments in marketable equity securities in accordance with Statements of Financial Accounting Standards (“SFAS”) No. 115, Accounting for Certain Investments in Debt and Equity Securities (“SFAS 115”). If at any time the Company has investments in marketable equity securities, they are classified as available-for-sale and recorded at fair value, utilizing the investments’ closing price at each reporting period. These investments are recorded on the balance sheet at market value, with the unrealized gains or losses, net of tax, reported as a component of accumulated other comprehensive income in the Consolidated Statement of Shareholders’ Equity and Comprehensive Income (Loss). The unrealized gain or loss is the difference between the Company’s original cost for an investment and the investment’s fair value at each reporting period. Realized gains or losses on securities sold are calculated using the specific identification method.

If management determines that an investment in available for sale securities has sustained an other-than-temporary decline in its value, the investment is written down to its fair value, by a charge to earnings. Such evaluation is dependent on the specific facts and circumstances. Factors that are considered by the Company in determining whether an other-than-temporary decline in value has occurred include: the market value of the security in relation to its cost basis; the financial condition of the investee; and the intent and ability to retain the investment for a sufficient period of time to allow for recovery in the market value of the investment.

In evaluating these factors above, management presumes a decline in value to be other-than-temporary if the market price of the security is 20% or more below the investment’s cost basis for a period of six months or more (the “20% criteria”). However, the presumption of an other-than-temporary decline in these instances may be overcome if there is persuasive evidence indicating that the decline is temporary in nature (e.g., strong operating performance of investee, historical volatility of investee, etc.). Additionally, there may be instances where impairment losses are recognized even if the 20% criteria is not satisfied (e.g., plan to sell the security in the near term and the fair value is below the Company’s cost basis).

For investments accounted for using the cost or equity method of accounting, management evaluates information (e.g., budgets, business plans, financial statements, etc.) in addition to quoted market price, if any, in determining whether an other-than-temporary decline in value exists. Factors indicative of an other-than-temporary decline include recurring operating losses, credit defaults and subsequent rounds of financings at an amount below the cost basis of an investment. This list is not all inclusive and management weighs all quantitative factors in determining if an other-than-temporary decline in value of an investment has occurred. In 2007, the Company recorded an impairment of $0.6 million on its investment in Concours, Inc. In 2005, the Company recorded an impairment of $2.5 million on its investment in Concours, Inc. There were no impairments recorded in 2006.

Goodwill and Intangible Assets

Goodwill is the excess of purchase price over the value of the net assets acquired. Goodwill is assessed for impairment at least annually or as triggering events occur. In making this assessment, we rely on a combination of factors including operating results, business plans, economic projections, anticipated cash flows and our current market value. There are inherent uncertainties related to these factors and management’s judgment in applying them to the analyses of goodwill impairment. Under SFAS 142, goodwill impairment is deemed to exist if the net book value of a reporting unit exceeds its estimated fair value. Estimated fair values of reporting units

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underlying the segments were estimated using either a discounted cash flow methodology, recent comparable transactions or a combination thereof. For further discussions, see Note 5 to our Consolidated Financial Statements.

Stock Based Compensation

We recognize compensation expense for all stock-based awards, using a fair value approach as prescribed in SFAS No. 123R Share Based Payments. The impact is more fully described in Note 11 to our Consolidated Financial Statements.

Income Taxes

We record an estimated liability for income and other taxes based on what we determine will likely be paid in the various tax jurisdictions in which we operate. Management uses its best judgment in the determination of these amounts. However, the liabilities ultimately realized and paid are dependent on various matters, including the resolution of the tax audits in the various affected tax jurisdictions, and may differ from the amounts recorded. An adjustment to the estimated liability would be recorded through income in the period in which it becomes probable that the amount of the actual liability differs from the amount recorded.

We record an estimated liability on what we determine to be unrecognized tax benefits related to various federal and state income tax matters. The difference between the total amount of the unrecognized tax benefits and the amount that would impact the effective tax rate consists of items that are offset by deferred tax assets and the federal tax benefit of state income taxes

We record valuation allowances to reduce deferred tax assets to the amount that is more likely than not to be realized. When assessing the need for valuation allowances, we consider future taxable income and ongoing prudent and feasible tax planning strategies. Should a change in circumstances lead to a change in judgment about the realizability of deferred tax assets in future years, we would adjust related valuation allowances in the period that the change in circumstances occurs, along with a corresponding increase or charge to income.

Use of Estimates in the Preparation of Financial Statements

The preparation of our financial statements requires us to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. All of the estimates that we make in preparing our financial statements are in conformity with accounting principles generally accepted in the United States of America. Actual results could differ from our estimates, which could impact our earnings.

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Results of Operations of Our Operating Segments: iGATE Solutions, iGATE Professional Services and iGATE Shared Services for the Year Ended December 31, 2007 as Compared to the Year Ended December 31, 2006:

	Year Ended December 31, 2007
	iGATE Solutions			iGATE Professional Services			iGATE Shared Services(1)			Total
	(Dollars in thousands)
External revenues	$	198,818		$	106,050		$	2,390		$	307,258
Cost of revenues		133,783			83,253			1,213			218,249
Gross margin		65,035			22,797			1,177			89,009
Selling, general and administrative		45,922			14,833			10,687			71,442
Restructuring charge		—			—			769			769
Goodwill impairment		1,950			—			—			1,950
Income (loss) from operations	$	17,163		$	7,964		$	(10,279	)	$	14,848
Other income, net								6,038			6,038
Minority interest								(2,992	)		(2,992	)
Loss on venture investments and affiliated companies								(193	)		(193	)
Gain on sale of stock of subsidiary								136			136
Equity in income of affiliated companies								29			29
(Loss) income before income taxes							$	(7,261	)	$	17,866
	Year Ended December 31, 2006
	iGATE Solutions			iGATE Professional Services			iGATE Shared Services(1)			Total
	(Dollars in thousands)
External revenues	$	169,570		$	112,476		$	1,542		$	283,588
Cost of revenues		122,694			86,594			924			210,212
Gross margin		46,876			25,882			618			73,376
Selling, general and administrative		42,587			16,459			10,574			69,620
Restructuring recovery		(2,507	)		(555	)		—			(3,062	)
Income (loss) from operations	$	6,796		$	9,978		$	(9,956	)	$	6,818
Other income, net								3,992			3,992
Minority interest								(752	)		(752	)
Gain on venture investments and affiliated companies								578			578
Equity in income of affiliated companies								317			317
(Loss) income before income taxes							$	(5,821	)	$	10,953

(1) Shared Services activities includes the operations of iGATE Clinical Research International Inc. and iGATE Clinical Research International Private Ltd., general corporate expenses, interest income and expense, equity in losses of unconsolidated affiliates, minority interest, loss from joint ventures and restructuring charges not identified to a specific segment, and other unallocated charges. The Company evaluates segments based on income (loss) from operations. Since certain administrative and other operating expenses or income sources have not been allocated to the operating business segments, this basis is not necessarily a measure computed in accordance with generally accepted accounting principles and it may not be comparable to other companies.

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Effective January 1, 2006, we recast our segments to include the operations of jobcurry Ltd. as part of the iGATE Professional Services segment due to their service offerings being more consistent with those offered by iGATE Professional Services. Previously, jobcurry Ltd. was included in the iGATE Shared Services segment. All prior periods have been reclassified to reflect the change to our segment reporting.

iGATE Solutions

Revenues for iGATE Solutions for the year ended December 31, 2007 were $198.8 million, an increase of $29.2 million or 17.2%, as compared to $169.6 million for the year ended December 31, 2006. Our revenue increase is directly attributable steadily increasing volumes from clients added during the last three years, modest billing rate increases and somewhat higher utilization rates. Revenues from the top 10 customers increased by more than $20.0 million in 2007 from the prior year and average billing rates were higher by approximately 6%. Average utilization rates increased by approximately 3% year over year.

The gross margin as a percentage of sales (“gross margin percentage”) for iGATE Solutions was 32.7% for the year ended December 31, 2007, as compared to 27.6% for the year ended December 31, 2006. This improvement was due primarily to the increasing mix of higher profit margin projects from existing customers, higher offshore and onsite billing rates, higher offshore volumes and improved resource utilization. The majority of new projects initiated during the year were accepted with estimated gross margins in excess of 40%, and the volume of work done offshore increased from 73% to 77%. This is significant because offshore work has a much higher profit margin due to lower labor costs in India.

Selling, general and administrative expenses (“S,G&A”) include all costs that are not directly associated with our iGATE Solutions segment’s revenue generating consultants. S,G&A expenses include employee costs, corporate costs and facilities costs. Employee costs include administrative salaries and related employee benefits, travel, recruiting and training costs. Corporate costs include costs such as legal, accounting and outside consulting fees. Facilities costs include rent, depreciation, amortization of intangible assets related to prior year acquisitions and communications costs. S,G&A costs for the year ended December 31, 2007 were $45.9 million or 23.1% of revenues, as compared to $42.6 million or 25.1% of revenues for the year ended December 31, 2006. Our employee costs increased approximately $1.6 million for the year as compared to the prior year mainly due to annual salary increases and recruiting costs. Our marketing and outside services costs increased by $0.4 million and our facilities costs increased $1.3 million mainly due to increases in depreciation and non-capital equipment expenditures at our campus in Bangalore, India.

In June 2007, we recorded a goodwill impairment charge of approximately $2.0 million, related to our July 2006 acquisition of LoanPro. This impairment charge was not considered as part of our discussion of iGS’ S,G&A costs and was recorded as a separate line item on our Consolidated Statements of Operations. This impairment cost was recorded because LoanPro was unable to renew a sales contract with its largest customer.

During 2006, we recovered $2.5 million of restructuring costs originally recorded in 2004 that relate to an office lease in the UK. We were able to obtain a tenant to assume the UK lease through a sublease agreement. These recovered costs were not considered as part of our discussion of S,G&A costs.

Operating income percentage was 8.6% for the year ended December 31, 2007 as compared to 4.0% for the year ended December 31, 2006. The increase in operating income percentage was mainly due to significant increases in revenues and gross margins.

iGATE Professional Services (“iPS”)

Revenues for iPS for the year ended December 31, 2007 were $106.1 million, a decrease of $6.4 million or 5.7%, as compared to $112.5 million for the year ended December 31, 2006. The decrease was primarily due to lower billable employee placements, the completion of a major project in the financial services sector which ended in 2006 and pricing pressures within the staffing industry.

Gross margin percentage for iPS was 21.5% for the year ended December 31, 2007, as compared to 23.0% for the year ended December 31, 2006. The decline was primarily due to the start up of a new recruiting subsidiary, a mix of lower margin business, somewhat lower utilization rates and pricing pressures in the staffing industry.

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S,G&A include all costs that are not directly associated with our iPS segment’s revenue generating consultants. S,G&A expenses include employee costs, corporate costs and facilities costs. Employee costs include administrative salaries and related employee benefits, travel, recruiting and training costs. Corporate costs include costs such as legal, accounting and outside consulting fees. Facilities costs include rent, depreciation and communications costs. S,G&A costs for the year ended December 31, 2007 were $14.8 million or 14.0% of revenues, as compared to $16.5 million or 14.6% of revenues for the year ended December 31, 2006. Our employee cost decreased approximately $0.9 million for the year ended December 31, 2007 mainly due to decreases in employee salaries, bonuses and commissions related to lower revenues levels. Our net corporate cost decreased approximately $0.9 million, mainly due to a $1.1 million liability recorded in 2006 related to a wage dispute regarding overtime wages. Our facilities costs remained consistent for the periods presented.

During the year ended December 31, 2006, we recovered $0.6 million of restructuring cost that was recorded in a prior year as a result of a bankruptcy settlement. These recovered costs were not considered as part of our discussion of S,G&A costs and is shown on a separate line item on our Consolidated Statements of Operations.

Operating income percentage was 7.5% for the year ended December 31, 2007 and 8.9% for the year ended December 31, 2006. Operating income percentage decreased mainly due to decreases in overall revenues and gross margins.

As part of the divestiture of iPS, iGATE’s historical and future financial results will now reflect the Professional Services business as discontinued operations, effective beginning as of January 1, 2008.

iGATE Shared Services (formerly “iGATE Corporate”)

Revenues for iGATE Shared Services for the year ended December 31, 2007 were $2.4 million, an increase of $0.9 million from revenues of $1.5 million for the comparable year ended December 31, 2006. This increase in revenue over the comparable period was due to increases in studies performed by iGATE Clinical Research International (“ICRI”), the Company’s clinical drug trials business.

Gross margin percentage was 49.2% for the year ended December 31, 2007, as compared to 40.1% for the year ended December 31, 2006. Revenue increases from new clinical studies generated additional gross margin as this work was performed at somewhat higher profitable levels.

S,G&A costs were $10.7 million for the year ended December 31, 2007, as compared to $10.6 million for the year ended December 31, 2006. No major changes or fluctuations were noted for the periods presented.

During the year ended December 31, 2007, we recorded $0.8 million of restructuring cost related to severance payments payable to several terminated employees at the corporate headquarters location in Pittsburgh, PA.

Other Income (Expense) Components

Other income, net for the year ended December 31, 2007, totaled $6.0 million, compared to $4.1 million for the year ended December 31, 2006. The following paragraphs discuss significant components of other income (expense) and changes within each of the years presented.

In 2007, our net interest income totaled $3.9 million as compared to $3.2 million for 2006. The increase was due to increased investment yields as well as increases in invested cash during 2007 as our cash flows increased during 2007, allowing us to invest additional cash. In 2007, we recognized $0.3 million of unfavorable foreign currency translation losses related to our intercompany debt with India which was offset by $2.4 million of favorable mark to market recoveries on our ineffective hedges. In 2006, we recognized $0.5 million of unfavorable foreign currency translation losses related to our intercompany debt with India which was offset by $1.2 million of favorable mark to market recoveries on our ineffective hedges. As of July 1, 2007, our hedging activities met the

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minimum requirements for effective hedge accounting treatment under current accounting rules. As a result, from July 1, 2007 onwards, we only recognize realized gains or losses as current period income or loss.

In 2006, we sold our investment in Brainbench for $0.6 million. Also in 2006, we recognized an additional $0.3 million of gain related to the sale of our Canadian operations as certain working capital estimates made as part of the original sale price were finalized. In 2007, we recognized an additional $0.3 million gain related to the sale of our Canadian operations.

In 2007, we recorded an impairment charge in our investment in Concours of $0.6 million, which was offset by a gain of $0.4 million from an escrow account related to a prior sale of a business. These gain and losses are included as a component of Gain (loss) on Venture Investments and Affiliated Companies in the Consolidated Statement of Operations.

We recognized income on affiliated companies of less than $0.1 million for the year ended December 31, 2007 as compared to $0.3 million for the year ended December 31, 2006. All activity in both periods was related to our investment in the Software AG joint venture.

Minority interest expense was $3.0 million for the year ended December 31, 2007 and relates to the minority interest portion of the income of iGS. Minority interest expense was $0.8 million for the year ended December 31, 2006 also related to the income of iGS. The year over year increase in minority interest expense was directly attributable to the greater profitability of iGS in 2007.

Income Taxes

Federal income taxes calculated at the U.S. statutory rate were $6.3 million for the year ended December 31, 2007. State income taxes which totaled $0.6 million for 2007 were calculated using a blended statutory rate, and are net of federal income tax benefit. Our income tax provision was $2.3 million at an effective rate of 12.8% for the year. This tax provision included a benefit of $0.1 million from deemed paid foreign tax credits associated with dividends paid by iGATE Global Solutions Limited (“iGS”) our Indian majority-owned subsidiary.

Several items caused variations from our statutory tax provision. iGS is eligible to claim a tax holiday on the majority of its operating income through March of 2009. The tax holiday resulted in a benefit of $4.5 million for the year ended December 31, 2007. iGS’ non-operating income, such as interest income, is not included in the tax holiday, and has been considered as part of our income tax provision.

Other variations typically arise because certain expenses or benefits recorded to our financial statements are either limited or disallowed when calculating our income tax provision. Certain expenses such as meals and entertainment and executive compensation are limited for income tax purposes. Other expenses such as minority interest expense are not deductible at all. In addition to these limited or disallowed deductions, valuation allowances have been provided against certain deductions for which the recognition of the corresponding tax benefit is unlikely. These deductions include net operating losses realized by iGS’s U.S. Branch, capital losses realized from the disposition of certain subsidiary and equity investments, and accruals for deferred compensation. The aggregate impact of these variations on the Company’s effective tax rate was $(0.1) million.

Federal income taxes calculated at the U.S. statutory rate were $3.8 million for the year ended December 31, 2006. State income taxes which totaled $0.3 million for 2006 were calculated using a blended statutory rate, and are net of federal income tax benefit. Our income tax provision was $2.3 million at an effective rate of 20.5% for the year ended December 31, 2006.

Several items caused variations from our statutory tax provision. iGS is eligible to claim a tax holiday on the majority of its operating income through March of 2009. The tax holiday resulted in a benefit of $2.7 million for the year ended December 31, 2006. iGS’ non-operating income, such as interest income, is not included in the tax holiday, and has been considered as part of our income tax provision.

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Other variations typically arise because certain expenses or benefits recorded to our financial statements are either limited or disallowed when calculating our income tax provision. Amortization expense related to our prior acquisitions was not deducted when calculating our income tax provision. Also, certain expenses such as meals and entertainment and executive compensation are limited for income tax purposes. The impact of the limited or disallowed items discussed above was $0.8 million. In addition, the tax provision was impacted by the utilization of UK net operating losses not recognized previously, and by valuation allowances provided against certain deductions for which the recognition of the corresponding tax benefit is unlikely. The utilization of the UK net operating losses resulted in a direct tax benefit approximating $0.9 million. The deductions offset by valuation allowances include net operating losses realized by the U.S. Branch operations of iGATE Global Solutions Limited, capital losses realized from the disposition of certain subsidiary and equity investments, and accruals for deferred compensation. The aggregate impact of these variations on the Company’s effective tax rate was $1.0 million.

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Results of Operations of our Operating Segments: iGATE Solutions, iGATE Professional Services and iGATE Shared Services for the Year ended December 31, 2006 as Compared to the Year ended December 31, 2005:

	Year Ended December 31, 2006
	iGATE Solutions			iGATE Professional Services			iGATE Shared Services(1)			Total
	(Dollars in thousands)
External revenues	$	169,570		$	112,476		$	1,542		$	283,588
Cost of revenues		122,694			86,594			924			210,212
Gross margin		46,876			25,882			618			73,376
Selling, general and administrative		42,587			16,459			10,574			69,620
Restructuring recovery		(2,507	)		(555	)		—			(3,062	)
Income (loss) from operations	$	6,796		$	9,978		$	(9,956	)	$	6,818
Other income, net								3,992			3,992
Minority interest								(752	)		(752	)
Gain on venture investments and affiliated companies								578			578
Equity in income of affiliated companies								317			317
(Loss) income before income taxes							$	(5,821	)	$	10,953
	Year Ended December 31, 2005
	iGATE Solutions			iGATE Professional Services			iGATE Shared Services(1)			Total
	(Dollars in thousands)
External revenues	$	138,032		$	136,775		$	1,185		$	275,992
Cost of revenues		97,108			107,354			648			205,110
Gross margin		40,924			29,421			537			70,882
Selling, general and administrative		38,948			17,173			11,362			67,483
Restructuring recovery		—			(481	)		—			(481	)
Income (loss) from operations	$	1,976		$	12,729		$	(10,825	)	$	3,880
Other expense, net								(275	)		(275	)
Minority interest								(261	)		(261	)
Gain on sale of stock of subsidiary								5,549			5,549
Loss on venture investments and affiliated companies, net								(2,149	)		(2,149	)
Equity in income of affiliated companies								338			338
(Loss) income before income taxes							$	(7,623	)	$	7,082

(1) Shared Services activities includes the operations of iGATE Clinical Research International Inc. and iGATE Clinical Research International Private Ltd. , general corporate expenses, interest income and expense, equity in losses of unconsolidated affiliates, minority interest, loss from joint ventures and restructuring charges not identified to a specific segment, and other unallocated charges. The Company evaluates segments based on income (loss) from operations. Since certain administrative and other operating expenses or income sources have not been allocated to the operating business segments, this basis is not necessarily a measure computed in accordance with generally accepted accounting principles and it may not be comparable to other companies.

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Effective January 1, 2006, we recast our segments to include the operations of jobcurry Ltd. as part of the iGATE Professional Services segment due to their service offerings being more consistent with those offered by iGATE Professional Services. Previously, jobcurry Ltd. was included in the iGATE Shared Services segment. All prior periods have been reclassified to reflect the change to our segment reporting.

iGATE Solutions

Revenues for iGATE Solutions for the year ended December 31, 2006 were $169.6 million, an increase of $31.6 million or 22.8%, as compared to $138.0 million for the year ended December 31, 2005. Our revenue increase is directly attributable to a combination of new customer wins and increased business with our recurring customers. Revenues from the top 10 customers increased by more than $15 million from the prior year and revenues from new customers added in the past year were approximately $12 million. In addition, our acquisition of LoanPro contributed $1.2 million to our total revenues for the year ended December 31, 2006.

The gross margin as a percentage of sales (“gross margin percentage”) for iGATE Solutions was 27.6% for the year ended December 31, 2006, as compared to 29.6% for the year ended December 31, 2005. The decrease in our gross margins was due to annual employee salary increases for iGS employees that occurred during the year both in India and the U.S. and approximately $1.8 million of stock compensation expense incurred in conjunction with our adoption of SFAS 123(R). Direct costs associated with our acquisition of LoanPro totaled $1.9 million for the year ended December 31, 2006, which also negatively impacted our gross margins.

Selling, general and administrative expenses (“S,G&A”) include all costs that are not directly associated with our iGATE Solutions segment’s revenue generating consultants. S,G&A expenses include employee costs, corporate costs and facilities costs. Employee costs include administrative salaries and related employee benefits, travel, recruiting and training costs. During the year ended December 31, 2006 we also recorded stock based compensation expense incurred as a result of our adoption of SFAS 123(R), which is included in employee costs. Corporate costs include costs such as legal, accounting and outside consulting fees. Facilities costs include rent, depreciation, amortization of intangible assets related to prior year acquisitions and communications costs. S,G&A costs for the year ended December 31, 2006 were $42.6 million or 25.1% of revenues, as compared to $38.9 million or 28.2% of revenues for the year ended December 31, 2005. Our acquisition of LoanPro contributed $0.6 million of S,G&A costs during the year ended December 31, 2006.

Our employee cost increased approximately $1.8 million for the year ended as compared to the prior year, mainly due to annual salary increases, other employee related costs and stock based compensation expense related to our adoption of SFAS 123(R). Our net corporate cost increased approximately $1.4 million for the year due to increases in bad debt expense and legal and accounting costs. Our net facilities costs increased $0.5 million mainly due to increases in depreciation and non-capital equipment expenditures at our new campus in Bangalore, India.

During the year, we recovered $2.5 million of restructuring costs originally recorded in 2004 that relate to an office lease in the UK. We were able to obtain a tenant to assume the UK lease through a sublease agreement. These recovered costs were not considered as part of our discussion of S,G&A costs.

Operating income percentage was 4.0% for the year ended December 31, 2006 and 1.4% for the year ended December 31, 2005 as increases in revenues as well as our restructuring recovery in 2006 were somewhat offset by decreases in gross margins.

iGATE Professional Services (“iPS”)

Revenues for iPS for the year ended December 31, 2006 were $112.5 million, a decrease of $24.3 million or 18.0%, as compared to $136.8 million for the year ended December 31, 2005. iPS sold its Canadian staffing operations in November 2005. The Canadian staffing operations’ sales for the year ended December 31, 2005

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were $29.0 million. For comparative purposes, iPS’ revenues for the year of 2006, without the impact of the Canadian staffing operations for the year of 2005, would have increased $4.7 million as overall demand for our staffing services remained consistent for the periods presented.

Gross margin percentage for iPS was 23.0% for the year ended December 31, 2006, as compared to 21.5% for the year ended December 31, 2005. For comparative purposes, iPS’ gross margin percentage for the year ended December 31, 2005, without the impact of the Canadian staffing operations would have been 22.0%. The contributing factors to the increased margin were savings in business travel and higher utilization of salaried employees versus subcontracted labor.

S,G&A include all costs that are not directly associated with our iPS segment’s revenue generating consultants. S,G&A expenses include employee costs, corporate costs and facilities costs. Employee costs include administrative salaries and related employee benefits, travel, recruiting and training costs. During the year ended December 31, 2006 we also recorded stock based compensation expense incurred as a result of our adoption of SFAS 123(R), which is also included in employee costs. Corporate costs include costs such as legal, accounting and outside consulting fees. Facilities costs include rent, depreciation and amortization of intangible assets related to prior year acquisitions and communications costs. S,G&A costs for the year ended December 31, 2006 were $15.9 million or 14.1% of revenues, as compared to $16.7 million or 12.2% of revenues for the year ended December 31, 2005. For the year ended December 31, 2005 the impact of the Canadian staffing operations consisted of employee costs of $3.5 million and facilities costs of $0.6 million.

Our net employee cost without the $3.5 million impact of costs of the Canadian staffing operations in 2005 increased approximately $1.9 million for the year ended December 31, 2006 mainly due to increases in temporary help and stock based compensation expense incurred related to our adoption of SFAS 123(R). Our net corporate costs increased $0.8 million for the year ended December 31, 2006. The increase was due primarily to a $1.1 million reserve established for a contingent liability wage dispute regarding the payment of overtime compensation on one specific project. These costs were offset primarily by the recovered restructuring costs which are discussed below. Our facilities costs without the $0.3 million impact of costs of the Canadian staffing operations in 2005 increased $0.2 million for the year ended December 31, 2006, due to increases in depreciation and communications costs.

During the years ended December 31, 2006 and 2005, we recovered $0.6 million and $0.5 million, respectively, of restructuring costs that were recorded in prior years. The 2006 amount was a result of a bankruptcy settlement and the amount for 2005 was due to the sale of our Canadian staffing operation. These recovered costs were not considered as part of our discussion of S,G&A costs.

Operating income percentage was 8.9% for the year ended December 31, 2006 and 9.3% for the year ended December 31, 2005. The Canadian staffing operations contributed approximately 1.4% of operating income for the year ended December 31, 2005. Operating income percentage decreased mainly due to decreases in overall revenues.

iGATE Shared Services (formerly “iGATE Corporate”)

Revenues for iGATE Shared Services for the year ended December 31, 2006 were $1.5 million, an increase of $0.4 million from revenues of $1.1 million for the comparable year ended December 31, 2005. This increase in revenue over the comparable period was due to increases in studies performed by iGATE Clinical Research International (“ICRI”), the Company’s clinical trials business.

Gross margin percentage was 40.1% for the year ended December 31, 2006, as compared to 45.3% for the year ended December 31, 2005. Direct costs increased in anticipation of increased clinical studies and delays in these studies negatively impacted our gross margin percentage.

S,G&A costs were $10.6 million for the year ended December 31, 2006, as compared to $11.3 million for the year ended December 31, 2005. Our S,G&A costs decreased mainly due to lower accounting and legal costs

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in 2006 due to a more efficient compliance effort related to Section 404 of the Sarbanes-Oxley Act. ICRI’s S,G&A expenses increased $0.5 million in 2006 mainly due to employee and salary related costs. These increases were offset by $1.2 million of decreased costs mainly due to lower accounting and legal costs in 2006 as a result of a more efficient compliance effort related to Section 404 of the Sarbanes-Oxley Act.

Other Income (Expense) Components

Other income, net for the year ended December 31, 2006, totaled $4.1 million, compared to $3.2 million for the year ended December 31, 2005. The following paragraphs discuss significant components of other income (expense) and changes within each of the years presented.

In 2006, our net interest income totaled $3.2 million as compared to $1.9 million for 2005. The increase was due to increased investment yields as well as increases in invested cash during 2006 as our cash flows increased during 2006, allowing us to invest additional cash. In 2006, we recognized $0.5 million of unfavorable foreign currency translation losses related to our intercompany debt with India which was offset by $1.2 million of favorable mark to market recoveries on our ineffective hedges. In 2005, we recognized $0.5 million of unfavorable foreign currency translation losses related to our intercompany debt with India and $1.2 million of unfavorable mark to market losses on our ineffective hedges. In 2006, our hedging activities did not meet the minimum requirements for effective hedge accounting treatment under current accounting rules. As a result, we recognized any unrealized gains or losses as current period income or loss. In 2005, we recognized miscellaneous expense of $0.3 million and had no significant miscellaneous expense in 2006.

In 2006, we sold our investment in Brainbench for $0.6 million. Also in 2006, we recognized an additional $0.3 million of gain related to the sale of our Canadian operations as certain working capital estimates made as part of the original sales price were finalized. In 2005, we recognized a $5.5 million gain related to the sale of our Canadian operations.

In 2005, we recorded an impairment charge of our investment in Concours of $2.5 million and recognized a $0.3 million gain on our sale of ScanSoft (f/k/a Speechworks) stock. These gain and losses are included as a component of Gain /loss) on Venture Investments and Affiliated Companies in the Consolidated Statement of Operations.

We recognized income on affiliated companies of $0.3 million for the year ended December 31, 2006 as compared to $0.3 million for the year ended December 31, 2005. All activity in 2006 was related to our investment in the Software AG joint venture. Our activity for the year ended December 31, 2005 was related to our investments in the CIBER and Software AG joint ventures. We acquired majority ownership of the CIBER joint venture in November 2005.

Minority interest expense was $0.8 million for the year ended December 31, 2006 and relates to the minority interest portion of the income of iGS. Minority interest expense was $0.3 million for the year ended December 31, 2005 also related to the income of iGS.

Income Taxes

Federal income taxes calculated at the U.S. statutory rate were $3.8 million for 2006. State income taxes which totaled $0.3 million for 2006 were calculated using a blended statutory rate, and are net of federal income tax benefit. Our income tax provision was $ 2.3 million at an effective rate of 20.5% for the year ended December 31, 2006.

Several items caused variations from our statutory tax provision. iGS is eligible to claim a tax holiday on the majority of its operating income through March of 2009. The tax holiday resulted in a benefit of $2.7 million for the year ended December 31, 2006. iGS’s non-operating income, such as interest income, is not included in the tax holiday, and has been considered as part of our income tax provision.

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Other variations typically arise because certain expenses or benefits recorded to our financial statements are either limited or disallowed when calculating our income tax provision. Amortization expense in the amount of $0.1 million related to our prior acquisitions was not deducted when calculating our income tax provision. Also, certain expenses such as meals and entertainment and executive compensation are limited for income tax purposes. Other expenses such as minority interest expense are not deductible at all. Approximately $0.5 million of these expenses were not deducted when calculating our income tax provision. In addition to the limited or disallowed items discussed above, the tax provision was favorably impacted by the utilization of UK net operating losses not recognized previously, and by valuation allowances provided against certain deductions for which the recognition of the corresponding tax benefit is unlikely. The utilization of the UK net operating losses resulted in a direct tax benefit approximating $0.9 million. The deductions offset by valuation allowances include net operating losses realized by the U.S. Branch operations of iGATE Global Solutions Limited, capital losses realized from the disposition of certain subsidiary and equity investments, and accruals for deferred compensation. The aggregate impact of these other variations on the Company’s effective tax rate was an unfavorable $1.1 million.

Federal income taxes calculated at the U.S. statutory rate were $2.5 million for 2005. State income taxes which totaled $0.2 million for 2005 were calculated using a blended statutory rate, and are net of federal income tax benefit. Our income tax provision was $0.1 million at an effective rate of 1.6% for the year ended December 31, 2005.

Several items caused variations from our statutory income tax provision. iGS is eligible to claim a tax holiday on the majority of its operating income through March of 2009. During the year ended December 31, 2005, iGS’s tax provisions totaled $0.7 million, mainly due to tax expense calculated on non-operating income items. iGS’s non-operating income, such as interest income and a gain on the sale of land, is not included in the tax holiday, and has been considered as part of our income tax provision.

In addition, on April 11, 2005, the Joint Committee on Taxation advised that the Internal Revenue Service examination of our income tax returns for the years 1999, 2000 and 2001 had been completed. The examination resulted in the recognition of a $2.2 million income tax benefit for the year ended December 31, 2005. We also recognized an income tax benefit in the amount of $6.9 million due to our ability to utilize capital losses that were recorded in prior years.

Other variations typically arise because certain expenses or benefits recorded to our financial statements are either limited or disallowed when calculating our tax provision. Amortization expense related to our prior acquisitions was not deducted when calculating our income tax provision. Also, certain expenses such as meals and entertainment and executive compensation are limited for income tax purposes. The impact of the limited or disallowed items discussed above was $0.9 million. In addition to these limited or disallowed deductions, valuation allowances have been provided against certain deductions for which the recognition of the corresponding tax benefit is unlikely. These deductions include net operating losses realized by iGS’s U.S. Branch, capital losses realized from the disposition of certain subsidiary and equity investments, and accruals for deferred compensation. The aggregate impact of these variations on the Company’s effective tax rate was an unfavorable $4.8 million.

Liquidity and Capital Resources

At December 31, 2007 we had cash and short-term investments of $49.7 million and $25.3 million, respectively, as compared to cash and short-term investments of $52.2 million and $31.8 million, respectively, at December 31, 2006. Short-term investments at December 31, 2007 and December 31, 2006 consisted mainly of highly liquid short-term investments. Our focus has been liquidity along with the preservation of our principal holdings.

Cash provided by operations is anticipated to be adequate to fund capital expenditures and other business needs over the next 12 months.

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Cash from Operations

Cash provided by operations was $36.9 million for the year ended December 31, 2007. Primary factors contributing to our cash provided by operations were net income of $15.6 million for the period, plus significant non cash items of approximately $18.3 million. These non cash items included depreciation and amortization of $11.0 million, stock based compensation expense related to SFAS 123(R) of $4.4 million, impairment of goodwill of $2.0 million and a loss on the write down of an investment of an affiliated company for $0.6 million.

The net effect on the Company’s working capital items for the year ended December 31, 2007 was a positive $3.0 million. Major changes in working capital were a decrease in accounts and unbilled receivables of $5.9 million, an increase in prepaid assets of $5.2 million and an increase in accounts payable and other liabilities of $2.2 million. The decrease in accounts receivable was directly related to a significant improvement in our days outstanding, as our days sales outstanding decreased from 67 days at the end of 2006 to 61 days as of December 31, 2007. The increase in prepaid assets consisted primarily of $5.0 million retained in an escrow account in India that was specifically earmarked for the repurchase of shares related to the delisting of iGS. The increase in accounts payable and other liabilities was directly related to increased accruals for expenses due to the higher level of business at the end of 2007 versus the prior year end.

Cash provided by operations was $14.5 million for the year ended December 31, 2006. Primary factors contributing to our cash provided by operations were net income of $8.7 million for the period, plus significant non cash items of approximately $12.8 million. These non cash items included depreciation and amortization of $10.9 million and stock based compensation expense related to SFAS 123(R) of $4.0 million.

The net effect on the Company’s working capital items for the year ended December 31, 2006 was a negative $(7.0) million. Major changes in working capital were an increase in accounts and unbilled receivables of $3.2 million, a decrease in restructuring reserves of $4.8 million and an increase in accounts payable and other liabilities of $1.2 million. The increase in accounts receivable was directly related to a higher volume of revenues recorded in the last two months of 2006 versus the last two months of 2005. The decrease in restructuring reserves consisted primarily of cash payments of $1.5 million made during 2006 on previous established reserves and a liability reduction of $2.5 million for the sublease of office space in the UK. The increase in accounts payable and other liabilities was directly related to increased accruals for expenses due to the higher level of business at the end of 2006 versus the prior year end.

Cash provided by operations was $14.0 million for the year ended December 31, 2005. Primary factors contributing to our cash provided by operations were net income of $7.0 million for the period, plus significant non cash items of approximately $10.0 million. These non cash items included depreciation and amortization of $10.9 million, stock based compensation expense of $0.8 million, and a net loss on the write down of investments in affiliated companies for $2.2 million. In addition, the Company recorded a non cash gain of $5.5 million on the sale of its Canadian operations in late November 2005.

The net effect on the Company’s working capital items for the year ended December 31, 2005 was a negative $(2.9) million. Major changes in working capital were a decrease in accounts and unbilled receivables of $3.9 million, a decrease in restructuring reserves of $2.3 million and a decrease in other liabilities of $4.9 million. The decrease in accounts receivable was due to a slight drop in days sales outstanding when compared to the prior year end. The decrease in restructuring reserves were due to cash payments made during 2005 on previously established reserves. The decrease in other liabilities was directly related to a large reduction in construction costs related to the expansion of the campus in Bangalore, India.

Investing Activities

Cash used in investing activities for the year ended December 31, 2007 was $41.2 million, as compared to cash used by investing activities of $9.9 in 2006 and cash provided of $2.7 million in 2005. We generated cash in 2005 due to a number of divestitures which are discussed below.

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Our capital expenditures were $8.5 million, $10.0 million and $12.2 million for the years ended December 31, 2007, 2006 and 2005, respectively. Significant portions of capital expenditures in all three years presented were due to expansion of our campus located in Bangalore, India.

In 2007, we acquired 4.0 million shares representing 12.65% of iGS outstanding shares from the Indian public at a cost of $42.2 million at a price of approximately $10.40 per share. The shares were purchased to delist iGS from the Indian stock exchanges. Under applicable Indian laws, iGS could be delisted only after iGATE and its affiliates acquired over 90% of iGS’ common stock in accordance with the delisting guidelines of the Securities and Exchange Board of India. We also purchased a 50% interest in TAC Staffing joint venture for $0.1 million. In 2006, we acquired cash of $0.3 million as part of our acquisition of an additional 55% of the equity of LoanPro. We made no acquisitions in 2005.

We received net cash proceeds from the sale of jobcurry of $1.0 million in 2007. In 2006, we sold our remaining interest in Brainbench for $0.6 million. In 2005, we sold our Canadian staffing operation for net cash proceeds of $9.3 million. We also sold our remaining shares of Scansoft for $0.7 million.

In 2007, we decreased our short-term investment portfolios by $8.6 million. We increased our short-term investment portfolios by $0.8 million is 2006. We decreased our short-term investment portfolios by $4.9 million in 2005. In 2007, we used our short-term investments for capital additions for our campus in Bangalore, India. In 2006, we were able to increase our short-term investments due to increases in cash. In 2005, we used our short-term investments for capital additions at our campus in Bangalore, India.

Financing Activities

Cash provided by financing activities was $2.7 million, $1.9 million and $0.9 million for the years ended December 31, 2007, 2006 and 2005, respectively. Sources of cash related to stock option exercises were $3.0 million, $1.9 million and $1.2 million in 2007, 2006 and 2005, respectively. These sources of cash were partially offset by vehicle lease costs of $0.3 million, $0.1 million and $0.3 million in 2007, 2006 and 2005, respectively. Tax benefits recognized in conjunction with SFAS 123(R) were $0.4 million and $0.3 million in 2007 and 2006, respectively.

The PNC Facility was renewed on August 22, 2007 for 365 days. Our borrowing availability under the PNC Facility is $35.0 million and is unsecured. As part of our agreement with PNC, we are required to maintain domestic cash and cash equivalents and short-term investments of at least $35.0 million, maintain net tangible worth of at least $100 million and maintain a liquidity ratio of not less than 1.5 to 1.0. The liquidity ratio is the sum of domestic cash and accounts receivable divided by total liabilities. In order to effect the delisting of iGS from the public stock exchanges in India, the Company transferred cash from the USA to India for the repurchase of shares from the public shareholders of iGS. This transfer of cash resulted in a violation of a financial covenant under the PNC Facility. The Company was granted a waiver by PNC and the current waiver extends through March 31, 2008. We are prohibited from paying dividends under the PNC Facility. We have no outstanding borrowings on the PNC Facility at December 31, 2007 and we expect to modify certain covenants in the PNC Facility in connection with the divestiture of iPS in 2008.

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Restructurings

We restructured our businesses in 2007, 2005, 2004, 2002 and 2001. As a result of these restructurings, we will be required to make cash payments in future years. The nature of the payments and the reasons for the restructurings are discussed more fully in Note 6 to the Consolidated Financial Statements. The following table details the cash payments that we will be required to make in the future years:

	2008		2009		2010		2011		2012		Thereafter
	(Dollars in thousands)
Severance and related items	$	651	$	105	$	—	$	—	$	—	$	—
Leases costs of office closure		302		—		—		—		—		—
Total	$	953	$	105	$	—	$	—	$	—	$	—

Unless otherwise discussed, we did not use our cash reserves for any other significant financing or investing activities, with the exception of cash being transferred from money-market accounts or other short-term investments (purchases of $67.5 million and sales of $76.2 million), certain capital expenditures that were incurred during the normal course of business (net additions of $8.5 million) and the exercise of employee stock options of $3.0 million.

Contractual Obligations

As part of our acquisition of ICRI, we may be required to fund their existing operations for a total amount of up to $3.0 million, based upon mutually agreed upon operating needs. We funded $0.9 million of this requirement in 2007, $0.5 million and $0.3 million in 2006 and 2005, respectively.

We also have financial commitments related to existing leases on our occupied space. Our commitments are as follows:

	2008		2009		2010		2011		2012		Thereafter
	(Dollars in thousands)
Leases	$	3,893	$	3,176	$	2,255	$	1,472	$	1,153	$	2,955

The Company has plans for a Phase IV expansion of its campus located in Bangalore, India. Total estimated costs of the project will approximate $25.0 million and will be paid out over the next 30 months. Phase I was completed in February 2004, Phase II was completed in December 2005 and Phase III was completed in January 2007. The Company has funded the entire project to date through a combination of available cash reserves and short term investments and expects to fund the costs of Phase IV through its net cash flows provided by operations.

In order to complete the delisting of iGS from the public stock exchanges in India and to complete the repurchase of all shares associated with this transaction, the Company will use approximately $30.0 million in cash in 2008 for this specific purpose. The Company will fund all monies through a combination of existing cash reserves and short term investments.

Off-Balance Sheet Arrangements

We do not have any off-balance arrangements.

Seasonality

Our operations are generally not affected by seasonal fluctuations. However, our consultants’ billable hours are affected by national holidays and vacation policies, which vary by country and by operating company.

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Economic Trends and Outlook

Recent reporting data that focused on worldwide IT spending indicates that the IT industry is expected to grow 6% year-over-year to total approximately $800 billion through 2009.

We are committed to the BPO market so evidenced by our construction of our Bangalore, India campus, and our 2004 acquisitions that focused on serving the BPO market. We believe we have the necessary infrastructure in place to take advantage of our opportunities in the BPO market.

Recently Issued Accounting Standards

In December 2007, the FASB issued SFAS 141(R), Business Combinations (“SFAS 141R”). SFAS 141R replaces SFAS 141, Business Combinations and applies to all transactions or other events in which an entity obtains control of one or more businesses. SFAS 141R requires the acquiring entity in a business combination to recognize all (and only) the assets acquired and liabilities assumed in the transaction; establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed; and requires the acquirer to disclose additional information needed to evaluate and understand the nature and financial effect of the business combination. SFAS 141R is effective prospectively for fiscal years beginning after December 15, 2008 and may not be applied before that date. The Company is currently evaluating the impact of adopting this statement on its Consolidated Financial Statements.

In December 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51. SFAS No. 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008, with earlier adoption prohibited. This statement requires the recognition of a noncontrolling interest (minority interest) as equity in the consolidated financial statements and separate from the parent’s equity. The amount of net earnings attributable to the noncontrolling interest will be included in consolidated net income on the face of the income statement. The statement also amends certain of ARB No. 51’s consolidation procedures for consistency with the requirements of SFAS No. 141(R). This statement also includes expanded disclosure requirements regarding the interests of the parent and its noncontrolling interest. The Company is currently evaluating the impact of adopting this Statement on its Consolidated Financial Statements.

In February 2007, the Financial Accounting Standards Board 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 permits entities to choose to measure eligible items at fair value at specified election dates and report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. The Company is currently evaluating the impact of adopting this Statement on its Consolidated Financial Statements.

In September 2006, the Financial Accounting Standards Board issued FASB Statement No. 157 “Fair Value Measurements” (“FASB 157”). This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. This Statement applies under other accounting pronouncements that require or permit fair value measurements, but does not require any new fair value measurements. However, for some entities, the application of this Statement will change current practice. This Statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. Earlier application is encouraged, provided that the reporting entity has not yet issued financial statements for that fiscal year, including financial statements for an interim period within that fiscal year. The Company is currently evaluating the effect of the provision of this statement on its Consolidated Financial Statements.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk Factors

We are exposed to market risks from adverse changes in foreign exchange rates, interest rates, especially the Indian Rupee (“Rupee”). We do not engage in speculative or leveraged transactions, nor do we hold or issue financial instruments for trading purposes.

Foreign Exchange Rate Sensitivity

iGS’s cash flow and earnings are subject to fluctuations due to exchange rate variation between the Rupee and USD. This foreign currency risk exists based upon the nature of the iGS’s operations. The majority of iGS’s customers and revenue are U.S. based, which provides an inherent foreign currency risk between USD and Rupee exchange rates.

We attempt to limit our exposure to changing Rupee rates mainly through financial market transactions. These transactions may include entering into forward or option contracts to hedge existing exposures. The instruments are used to reduce risk by essentially creating offsetting currency exposures. The following table presents information related to foreign currency contracts held by the Company:

LIST OF OUTSTANDING HEDGE TRANSACTIONS ON DECEMBER 31, 2007

	Maturity Date Ranges	Strike Price at Rupee Rate Ranges	Amount		Option	Net Unrealized Gains/(Losses) December 31, 2007
			(Dollars in thousands)
FORWARD CONTRACTS—USD
From:	January 29, 2008	39.57
To:	December 31, 2008	42.28
Subtotal			$	21,000		$	403
CURRENCY OPTION CONTRACTS—USD
From:	January 29, 2008	41.77	$	10,000	Buy/Sell Put
To:	August 31, 2009	43.00	$	9,000	Buy/Sell Call
Subtotal			$	19,000		$	1,148
FORWARD CONTRACTS—CAD
From:	January 31, 2008	38.72
To:	May 28, 2008	40.43
Subtotal			$	6,000		$	(77	)
Total						$	1,474

The net unrealized gains/(losses) were calculated using a Rupee exchange rate of 39.401.

As of December 31, 2007, iGATE Global Solutions Limited’s (“iGS”) forward contracts to hedge intercompany cash flows will all mature by December 31, 2008. As each contract matures, iGS will receive Rupees at the contracted (“strike price”) rate while delivering either the U.S. Dollar (“USD”) or Canadian Dollar (“CAD”) equivalent of Rupees at the prevailing Rupee exchange rate. Contracts that meet qualifying criteria are accounted for as foreign currency cash flow hedges. Accordingly, the effective portion of gains and losses is deferred as a component of other comprehensive income and is recognized in earnings at the time the hedged item affects earnings. Any gains and losses due to hedge ineffectiveness or related to contracts which do not qualify for hedge

34

accounting are recorded in current period earnings in “other income and expense”. At December 31, 2007 all of the contracts outstanding met qualifying criteria to receive hedge accounting and have been deemed to be effective. As a result, for the year ended December 31, 2007, iGS has appropriately recorded other comprehensive income of $0.3 million. For the year ended December 31, 2006, iGS recognized a gain of $0.6 million.

As of December 31, 2007, iGS’ option contracts to hedge intercompany cash flows will all mature by August 31, 2009. As each contract matures and dependent upon prevailing Rupee exchange rates, iGS will either buy USDs or CADs at each contracted “put” strike price or sell USDs or CADs at each contracted “call” strike price. Contracts that meet qualifying criteria are accounted for as foreign currency cash flow hedges. Accordingly, the effective portion of gains and losses is deferred as a component of other comprehensive income and is recognized in earnings at the time the hedged item affects earnings. Any gains and losses due to hedge ineffectiveness or related to contracts which do not qualify for hedge accounting are recorded in current period earnings in “other income and expense”. At December 31, 2007 all of the contracts entered prior to July 1, 2007 were outstanding. Contracts entered into subsequent to July 1, 2007 met qualifying criteria to receive hedge accounting and have been deemed to be effective. As a result, for the year ended December 31, 2007, iGS has appropriately recorded other comprehensive income of $1.2 million. For the year ended December 31, 2006, iGS recognized a gain of $0.9 million.

As of December 31, 2007, iGS’ there are no outstanding principal swaps to hedge intercompany debt from iGS to the Company. Contracts that meet qualifying criteria are accounted for as foreign currency cash flow hedges. Accordingly, the effective portion of gains and losses is deferred as a component of other comprehensive income and is recognized in earnings at the time the hedged item affects earnings. Any gains and losses due to hedge ineffectiveness or related to contracts which do not qualify for hedge accounting are recorded in current period earnings in “other income and expense”. At December 31, 2007, there were no principal only swaps outstanding. For the year ended December 31, 2006, iGS recognized a loss of ($0.3) million.

Substantially all of the Company’s foreign affiliates’ financial instruments are denominated in their respective functional currencies. (See Note 3 to the Consolidated Financial Statements.)

Interest Rate Sensitivity

The Company is exposed to changes in interest rates primarily as a result of its investing activities used to maintain liquidity and fund business operations. The nature and amount of the Company’s long-term and short-term debt can be expected to vary as a result of future business requirements, market conditions and other factors.

Effect of Hypothetical 10% Fluctuation In Market Prices

Our primary net foreign currency exposure is the Rupee (“INR”). The fair value of foreign exchange contracts is subject to changes in foreign currency exchange rates.

As of December 31, 2007, the potential gain or loss in the fair value of the Company’s outstanding foreign currency contracts assuming hypothetical 5%, 2% and 1% fluctuations in currency rates would be approximately:

	Valuation given X% decrease in Rupee / USD rate								Fair Value as of December 31, 2007		Valuation give X% increase in Rupee / USD rate
	(10%)		(5%)		(2%)		(1%)				1%		2%		5%			10%
Rupee to USD rate		35.461		37.431		38.613		39.007		39.401		39.795		40.189		41.371			43.341
Derivative Instruments	$	5.3	$	3.3	$	2.2	$	1.8	$	1.5	$	1.0	$	0.6	$	(0.5	)	$	(2.4	)

However, it should be noted that any change in the fair value of the contracts, real or hypothetical, would be significantly offset by an inverse change in the value of the underlying hedged items. In relation to currency contracts, this hypothetical calculation assumes that each exchange rate would change in the same direction relative to the USD.

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Inflation

We do not believe that inflation had a significant impact on our results of operations for the periods presented. On an ongoing basis, we attempt to minimize any effects of inflation on our operating results by controlling operating costs and whenever possible, seeking to insure that billing rates reflect increases in costs due to inflation.

For all significant foreign operations, the functional currency is the local currency. Assets and liabilities of these operations are translated at the exchange rate in effect at each period end. Statement of Operations accounts are translated at the average exchange rate prevailing during the year. Translation adjustments arising from the use of differing exchange rates from period to period are included as a component of other comprehensive income (loss). Realized gains and losses from foreign currency transactions are included in net loss for the periods presented. Exchange rate transaction gains (losses) did not have a significant impact on operations for the year ended December 31, 2007.

Seasonality

Our operations are generally not affected by seasonal fluctuations. However, our consultants’ billable hours are affected by national holidays and vacation policies, which vary by country and by operating company.

Short-term investments are invested in highly liquid securities such as money market funds.

The Company’s cash flow and earnings are subject to fluctuations due to exchange rate variation. Foreign currency risk exists by nature of the Company’s global operations. The Company sells its services in a number of locations around the world, and hence foreign currency risk is diversified.

When appropriate, the Company may attempt to limit its exposure to changing foreign exchange rates through both operational and financial market actions. These actions may include entering into forward contracts to hedge existing exposures. The instrument is used to reduce risk by essentially creating offsetting currency exposure.

Substantially all of the Company’s foreign affiliates’ financial instruments are denominated in their respective functional currencies. Accordingly, exposure to exchange risk on foreign currency financial instruments is not material.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Financial Statements and Supplementary Data required by this item are filed as part of this Form 10-K. See Index to Consolidated Financial Statements on page 38 of this Form 10-K.

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MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL REPORTING

The accompanying Consolidated Financial Statements of iGATE Corporation and subsidiaries have been prepared by management, which is responsible for their integrity and objectivity. The statements have been prepared in conformity with accounting principles generally accepted in the United States of America and necessarily include amounts based on management’s best estimates and judgments.

The Company’s Consolidated Financial Statements for the year ended December 31, 2007 have been audited by BDO Seidman LLP, Independent Registered Public Accounting Firm, whose report thereon appears on page 39 of this Form 10-K.

The Board of Directors pursues its responsibility for the Company’s financial reporting and accounting practices through its Audit Committee, all of the members of which are independent directors. The Audit Committee’s duties include recommending to the Board of Directors the Independent Registered Public Accounting Firm to audit the Company’s financial statements, reviewing the scope and results of the independent accountants activities and reporting the results of the committee’s activities to the Board of Directors. The Independent Registered Public Accounting Firm has met with the Audit Committee in the presence of management representatives to discuss the results of their audit work. The Independent Registered Public Accounting Firm has direct access to the Audit Committee.

Sunil Wadhwani

Co-Chairman, Chief Executive Officer, and Director

Michael J. Zugay

Senior Vice-President and Chief Financial Officer

37

iGATE CORPORATION

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Report of Independent Registered Public Accounting Firm	39
Consolidated Balance Sheets as of December 31, 2007 and 2006	40
Consolidated Statements of Operations for the years ended December 31, 2007, 2006 and 2005	41
Consolidated Statements of Shareholders’ Equity and Comprehensive Income (Loss) for the years ended December 31, 2007, 2006 and 2005	42
Consolidated Statements of Cash Flows for the years ended December 31, 2007, 2006 and 2005	43
Notes to Consolidated Financial Statements	44

38

Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders

iGATE Corporation

Pittsburgh, Pennsylvania

We have audited the accompanying consolidated balance sheets of iGATE Corporation as of December 31, 2007 and 2006 and the related consolidated statements of operations, stockholders’ equity and comprehensive income (loss), and cash flows for each of the three years in the period ended December 31, 2007. We have also audited the accompanying Schedule II, Valuation and Qualifying Accounts for each of the three years in the period ended December 31, 2007. These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule 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 and schedule are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 and schedule referred to above present fairly, in all material respects, the financial position of iGATE Corporation at December 31, 2007 and 2006 and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2007, in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 1 to the consolidated financial statements, the Company adopted FASB Interpretation No. 48 Accounting for Uncertainty in Income Taxes—an Interpretation of FASB No. 109 as of January 1, 2007. As discussed in Note 11 to the consolidated financial statements, the Company adopted Statement of Financial Accounting Standards No. 123(R), Share-Based Payment, as of January 1, 2006.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of iGATE Corporation’s internal control over financial reporting as of December 31, 2007, 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 March 17, 2008 expressed an unqualified opinion thereon.

/s/ BDO Seidman, LLP

Milwaukee, Wisconsin

March 17, 2008

39

iGATE CORPORATION

CONSOLIDATED BALANCE SHEETS

	At December 31,
	2007			2006
	(Dollars in thousands, except per share amounts)
ASSETS
Current assets:
Cash and cash equivalents	$	49,684		$	52,154
Short-term investments		25,295			31,826
Accounts receivable, net of allowance for uncollectible accounts of $936 and $1,090, respectively		41,214			43,035
Unbilled receivables		11,099			10,343
Employee advances		1,392			1,126
Prepaid and other current assets		11,263			6,574
Prepaid income taxes		998			380
Deferred income taxes		703			1,111
Total current assets		141,648			146,549
Investments in unconsolidated affiliates		1,005			1,398
Land, building, equipment and leasehold improvements, at cost:
Land and building		19,224			10,983
Equipment		60,958			56.476
Leasehold improvements		4,321			4,489
		84,503			71,948
Less—accumulated depreciation		(48,797	)		(42,081	)
Net land, building, equipment and leasehold improvements		35,706			29,867
Goodwill		36,562			11,014
Intangible assets, net		1,003			1,946
Total assets	$	215,924		$	190,774
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	6,190		$	4,997
Accrued payroll and related costs		18,618			17,966
Accrued income taxes		661			646
Other accrued liabilities		18,671			8,591
Restructuring reserve		1,058			497
Deferred revenue		684			465
Total current liabilities		45,882			33,162
Other long-term liabilities		536			406
Deferred income taxes		7,103			9,483
Total liabilities		53,521			43,051
Minority interest		6,437			14,372
Shareholders’ equity:
Preferred Stock, without par value: 20,000,000 shares authorized, 1 share of Series A Preferred Stock held in treasury in 2007and 2006, respectively		—			—
Common Stock, par value $0.01 per share: 100,000,000 shares authorized, 54,619,807 and 54,021,670 shares issued at December 31, 2007 and 2006, respectively		546			540
Additional paid-in capital		165,757			167,626
Accumulated deficit		(6,026	)		(21,037	)
Common Stock held in treasury, at cost, 990,102 shares at December 31, 2007and 2006, respectively		(14,714	)		(14,714	)
Accumulated other comprehensive income		10,403			936
Total shareholders’ equity		155,966			133,351
Total liabilities and shareholders’ equity	$	215,924		$	190,774

The accompanying notes are an integral part of these Consolidated Financial Statements.

40

iGATE CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

	Year Ended December 31,
	2007			2006			2005
	(Dollars and shares in thousands, except per share data)
Revenues	$	307,258		$	283,588		$	275,992
Cost of revenues		218,249			210,212			205,110
Gross margin		89,009			73,376			70,882
Selling, general and administrative		71,442			69,620			67,483
Restructuring charges (recovery)		769			(3,062	)		(481	)
Goodwill impairment		1,950			—			—
Income from operations		14,848			6,818			3,880
Interest income		4,030			3,311			2,123
Interest expense		(91	)		(121	)		(204	)
Other income (expense), net		2,099			802			(2,194	)
Equity in income of affiliated companies		29			317			338
Minority interest		(2,992	)		(752	)		(261	)
Gain on sale of stock of subsidiary		136			—			5,549
(Loss) gain on venture investments and affiliated companies, net		(193	)		578			(2,149	)
Income before income taxes		17,866			10,953			7,082
Income tax expense		2,281			2,249			113
Net income	$	15,585		$	8,704		$	6,969
Net earnings per common share, basic:
Net earnings—basic	$	0.29		$	0.16		$	0.13
Net earnings per common share, diluted:
Net earnings—diluted	$	0.29		$	0.16		$	0.13
Weighted average common shares, basic		53,333			52,939			52,530
Weighted average common shares, diluted		53,972			53,278			52,734

The accompanying notes are an integral part of these Consolidated Financial Statements.

41

iGATE CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY AND COMPREHENSIVE INCOME (LOSS)

	Common Stock																Accumulated Other Comprehensive Income (Loss)
	Shares	Par Value		Series A Preferred Shares	Additional Paid-in Capital			Accumulated (Deficit)			Deferred Compensation			Treasury Stock						Total Shareholders’ Equity			Comprehensive Income/ (Loss)
	(Dollars in thousands)
Balances, December 31, 2004	52,512,346	$	535	—	$	161,345		$	(36,710	)	$	(1,934	)	$	(14,714	)	$	3,178		$	111,700
Exercise of stock options, including tax benefit recognized of $0.1 million	254,190		3	—		933			—			—			—			—			936
Amortization of deferred compensation	—		—	—		—			—			815			—			—			815
Comprehensive (loss) income:
Reclassification adjustment for gains realized in net income	—		—	—		—			—			—			—			(65	)		(65	)	$	(65	)
Currency translation adjustment	—		—	—		—			—			—			—			(2,683	)		(2,683	)		(2,683	)
Net income	—		—	—		—			6,969			—			—			—			6,969			6,969
																							$	4,221
Balances, December 31, 2005	52,766,536	$	538	—	$	162,278		$	(29,741	)	$	(1,119	)	$	(14,714	)	$	430		$	117,672
Exercise of stock options, including tax benefit recognized of $0.1 million	250,032		2	—		994			—			—			—			—			996
Reclassification of deferred compensation	—		—	—		(1,119	)		—			1,119			—			—			—
iGATE stock-based compensation expense	15,000		—	—		938			—			—			—			—			938
Subsidiary option activity and stock based compensation expense			—	—		4,535			—			—			—			—			4,535
Comprehensive income:
Currency translation adjustment	—		—	—		—			—			—			—			506			506			506
Net income	—		—	—		—			8,704			—			—			—			8,704			8,704
																							$	9,210
Balances, December 31, 2006	53,031,568	$	540	—	$	167,626		$	(21,037	)	$	—		$	(14,714	)	$	936		$	133,351
Application of FIN 48	—		—	—		—			(574	)		—			—			—			(574	)
Exercise of stock options, including tax benefit recognized of $1.0 million	499,137		5	—		2,490			—			—			—			—			2,495
iGATE stock-based compensation expense	99,000		1	—		1,590			—			—			—			—			1,591
Subsidiary option activity and stock based compensation expense	—		—	—		2,350			—			—			—			—			2,350
Redemption of subsidiary options	—		—	—		(8,299	)		—			—			—			—			(8,299	)
Comprehensive income:
Unrealized gain on investments	—		—	—		—			—			—			—			1,474			1,474			1,474
Currency translation adjustment	—		—	—		—			—			—			—			7,993			7,993			7,993
Net income	—		—	—		—			15,585			—			—			—			15,585			15,585
																							$	25,052
Balances, December 31, 2007	53,629,705	$	546	—	$	165,757		$	(6,026	)	$	—		$	(14,714	)	$	10,403		$	155,966

The accompanying notes are an integral part of these Consolidated Financial Statements.

42

iGATE CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended December 31,
	2007			2006			2005
	(Dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Operations:
Net income	$	15,585		$	8,704		$	6,969
Adjustments to reconcile net income to cash provided by operations:
Depreciation and amortization		11,021			10,851			10,915
Gain on sale of stock of subsidiaries		(136	)		—			(5,549	)
Gain on other investments		(641	)		(108	)		(206	)
Unrealized loss gain on derivative instruments		347			(1,547	)		1,263
Bad debt expense (recovery)		(159	)		286			(949	)
Deferred income taxes, net		(2,062	)		(522	)		1,017
Loss gain on venture investments and affiliated companies, net		642			(578	)		2,149
Impairment of goodwill		1,950			—			—
Equity in income of affiliated companies		(29	)		(317	)		(338	)
Minority interest		2,992			752			261
Discount on stock sold to employees		—			—			606
Stock compensation expense		4,380			4,009			815
Working capital items excluding effects of divestitures:
Accounts receivable and unbilled receivables		5,929			(3,239	)		3,909
Employee advances		(130	)		36			167
Prepaid and other current assets		(5,227	)		(360	)		(822	)
Accounts payable		1,136			(1,154	)		1,248
Accrued and other current liabilities		1,029			2,325			(4,865	)
Restructuring reserves		515			(4,751	)		(2,273	)
Deferred revenue		(283	)		94			(274	)
Net cash flows provided by continuing operations		36,859			14,481			14,043
Cash flows used by discontinued operations		—			—			(88	)
Net cash flows provided by operating activities		36,859			14,481			13,955
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to equipment and leasehold improvements, net		(8,510	)		(9,978	)		(12,199	)
Purchases of investments		(67,527	)		(20,889	)		(22,347	)
Sales of investments		76,173			20,108			27,288
Sales of investments in unconsolidated affiliates		—			578			678
Investments in unconsolidated affiliates		(62	)		—			—
Acquisitions, net of cash acquired		—			286			—
Purchase of iGS stock		(42,221	)		—			—
Proceeds from the sale of affiliates, net of cash		995			—			9.310
Net cash flows (used) provided by investing activities		(41,152	)		(9,895	)		2,730
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on secured financing		(252	)		(78	)		(301	)
Net proceeds from exercise of stock options		2,958			1,936			1,166
Net cash flows provided by financing activities		2,706			1,858			865
Effect of currency translation		(883	)		(127	)		86
Net change in cash and cash equivalents		(2,470	)		6,317			17,636
Cash and cash equivalents, beginning of year		52,154			45,837			28,201
Cash and cash equivalents, end of year	$	49,684		$	52,154		$	45,837
SUPPLEMENTAL DISCLOSURE:
Cash payments for income taxes	$	1,560		$	283		$	1,218
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Unrealized gain (loss) on investments and derivative instruments	$	1,473		$	320		$	(1,237	)
Capitalized leases	$	795		$	343		$	301

The accompanying notes are an integral part of these Consolidated Financial Statements.

43

iGATE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2007 AND 2006

1. Summary of Significant Accounting Policies

(a) Nature of Business

iGATE Corporation (the “Company”) is a worldwide provider of information technology (“IT”) and offshore outsourcing services to large and medium-sized organizations.

(b) Principles of Consolidation

The Consolidated Financial Statements include the accounts of the Company and its wholly-owned and majority-owned subsidiaries. All material intercompany transactions and balances have been eliminated in consolidation. The Company accounts for investments in businesses in which it owns between 20% and 50% of equity or otherwise acquires management influence using the equity method as prescribed by Accounting Principles Board Opinion No. 18, The Equity Method of Accounting for Investments in Common Stock. Investments in which the Company acquires less than a 20% interest, or in which the Company does not acquire management influence, are accounted for using the cost method of accounting or, if publicly traded, as available-for-sale securities.

(c) Uses of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

(d) Reclassifications

Certain amounts in previously issued financial statements were reclassified to conform to 2007 presentations.

(e) Cash and Cash Equivalents

Cash and cash equivalents are defined as cash and highly liquid investments with maturities of three months or less when purchased. Cash equivalents are stated at cost, which approximates market value.

(f) Short-Term Investments

Short-term investments consist of money market funds and are stated at market which approximates fair value.

(g) Accounts Receivable and Unbilled Receivables

The Company extends credit to clients based upon management’s assessment of their creditworthiness. Substantially all of the Company’s revenues (and the resulting accounts receivable) are from Global 2000 companies, major systems integrators and governmental agencies.

Unbilled receivables represent amounts recognized as revenues for the periods presented based on services performed in accordance with the terms of client contracts that will be invoiced in subsequent periods.

44

iGATE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

AS OF DECEMBER 31, 2007 AND 2006

(h) Allowance for Uncollectible Accounts

Accounts receivables are reviewed periodically to determine the probability of loss. The allowance for uncollectible accounts is determined using the combination of the specific identification method for balances deemed uncollectible, as well as judgments made by the Company based upon historical and expected charge-off experience.

(i) Employee Advances

Employees can be advanced up to $2,500 at the discretion of the Company. Normally, advances are based upon financial need at date of hire. Advances are deducted from the employees salary over a six-month period or until paid in full.

(j) Investments in Unconsolidated Affiliates

The Company accounts for its investments in marketable equity securities in accordance with Statements of Financial Accounting Standards (“SFAS”) No. 115, Accounting for Certain Investments in Debt and Equity Securities (“SFAS 115”). If at any time the Company has investments in marketable equity securities, they are classified as available-for-sale and recorded at fair value, utilizing the investments closing price at each reporting period. These investments are recorded on the balance sheet at market value, with the unrealized gains or losses, net of tax, reported as a component of accumulated other comprehensive income in the Consolidated Statement of Shareholders’ Equity and Comprehensive Income (Loss). The unrealized gain or loss is the difference between the Company’s original cost for an investment and the investment’s fair value at each reporting period. Realized gains or losses on securities sold are calculated using the specific identification method.

If management determines that an investment in available for sale securities has sustained an other-than-temporary decline in its value, the investment is written down to its fair value, by a charge to earnings. Such evaluation is dependent on the specific facts and circumstances. Factors that are considered by the Company in determining whether an other-than-temporary decline in value has occurred include: the market value of the security in relation to its cost basis; the financial condition of the investee; and the intent and ability to retain the investment for a sufficient period of time to allow for recovery in the market value of the investment.

In evaluating these factors above, management presumes a decline in value to be other-than-temporary if the market price of the security is 20% or more below the investment’s cost basis for a period of six months or more (the “20% criteria”). However, the presumption of an other-than-temporary decline in these instances may be overcome if there is persuasive evidence indicating that the decline is temporary in nature (e.g., strong operating performance of investee, historical volatility of investee, etc.). Additionally, there may be instances where impairment losses are recognized even if the 20% criteria is not satisfied (e.g., plan to sell the security in the near term and the fair value is below the Company’s cost basis). No such impairment losses were incurred in 2007 or 2006 or 2005.

For investments accounted for using the cost or equity method of accounting, management evaluates information (e.g., budgets, business plans, financial statements, etc.) in addition to quoted market price, if any, in determining whether an other-than-temporary decline in value exists. Factors indicative of an other-than-temporary decline include recurring operating losses, credit defaults and subsequent rounds of financings at an amount below the cost basis of an investment. This list is not all inclusive and management weighs all quantitative factors in determining if an other-than-temporary decline in value of an investment has occurred. In 2007, the Company recorded an impairment of its remaining investment in Concours, Inc. of $0.6 million. In 2005, the Company recorded an impairment of $2.5 million on its investment in Concours, Inc. There were no impairments recorded in 2006.

45

iGATE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

AS OF DECEMBER 31, 2007 AND 2006

(k) Land, Building, Equipment and Leasehold Improvements

Property and equipment are stated at cost. The Company provides for depreciation using the straight-line method over the estimated useful lives. Upon disposal, assets and related accumulated depreciation are removed from the Company’s accounts and the resulting gains and losses are reflected in loss from operations in the Consolidated Statements of Operations. Repairs and maintenance are charged to expense as incurred. Improvement and betterments that extend the useful life of an asset are capitalized.

The estimated useful lives of depreciable assets are as follows:

Building	25 years
Laptop Computers	18 months
Equipment	3–5 years
Leasehold Improvements	Shorter of the life of the improvement or lease term ranging from 3 to 10 years

Depreciation and amortization expense related to fixed assets amounted to $10.1 million, $9.2 million, and $8.6 million in 2007, 2006 and 2005, respectively.

(l) Goodwill and Intangible Assets

Goodwill is the excess of purchase price over the value of the net assets acquired but will be subject to an annual impairment assessment of their carrying value, or more frequently if circumstances change. Under SFAS 142, Goodwill and Other Intangible Assets, goodwill and intangibles with indefinite useful lives are no longer amortized but are subject to, at a minimum, an annual impairment assessment of their carrying value. Under SFAS 142, goodwill impairment is deemed to exist if the net book value of a reporting unit exceeds its estimated fair value. Estimated fair values of reporting units underlying the segments were estimated using either a discounted cash flow methodology, recent comparable transactions or a combination thereof. For further discussions, see Note 5.

The cost of other acquired intangibles is amortized on a straight-line basis over their estimated useful lives.

The estimated useful lives of intangible assets are as follows:

Intellectual property	3–5 years
Customer relationships	3–6 years
Beneficial employment contracts	2–4 years

The Company assesses the carrying value of its long-lived assets, including land, building, equipment and leasehold improvement and amortizable intangible assets, whenever economic events or changes in circumstances indicate that the carrying values of the assets may not be recoverable. Long-lived assets are considered to be impaired when the sum of the undiscounted expected future net operating cash flows is less than the carrying values of the related assets.

(m) Income Taxes

Deferred income taxes are provided for the temporary differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities. The Company has evaluated its deferred tax asset and has recorded a valuation allowance where appropriate.

46

iGATE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

AS OF DECEMBER 31, 2007 AND 2006

Historically, the government of India has provided incentives, in the form of tax holidays, to encourage foreign investment. Under the Indian Income Tax Act, 1961, the Company’s Indian subsidiary is eligible to claim a tax holiday for 10 consecutive assessment years on profits derived from the export of software services from divisions registered under the Software Technology Parks at Bangalore, Chennai and Pune. The benefits of the holiday began to expire for certain of the units in 2005.

The Company has not provided for U.S. deferred income taxes or foreign withholding tax on basis differences in its non-U.S. subsidiaries of $12.5 million that result primarily from undistributed earnings the Company intends to reinvest indefinitely. Determination of the deferred income tax liability on these basis differences is not practicable because such liability, if any, is dependent on circumstances existing if and when remittance occurs.

(n) Minority Interest

Minority interest represents the proportionate share of outside equity holders. At December 31, 2007 and 2006, the Company had outside equity holders for the following Companies:

	Percentage Outside Ownership
	2007		2006
iGATE Global Solutions Ltd. (“iGS”)	6.6	%	18.2	%
iGATE Clinical Research International Private Ltd. (“ICRI”)	5	%	5	%
LoanPro	0	%	49.0	%

iGS is a publicly held Company in India. On November 13, 2007, the iGS shareholders approved the delisting of iGS from the Bombay Stock Exchange, the National Stock Exchange, and the Bangalore Stock Exchange. The delisting was consummated on February 4, 2008.

(o) Disclosures about Fair Value of Financial Instruments

The following methods and assumptions were used to estimate the fair value of each class of financial instrument for which it is practicable to estimate that fair value:

Cash and short-term investments—The carrying amount approximates market value.

Accounts receivable—The carrying amount approximates market.

Revolving credit facility—The carrying amount approximates market value. The outstanding balance is reflected at its outstanding face value, excluding unpaid accrued interest at an interest rate range, dependent upon the level of borrowings, at the lesser of the current LIBOR rate +1.00% to +2.50% or the Prime rate +0.50%, calculated on a per annum basis.

Accounts payable—The carrying amount approximates market.

(p) Derivatives Instruments and Hedging Activities

The Company uses derivative financial instruments for the purpose of hedging currency, price, and interest rate exposures, which exist as part of ongoing business operations. The Company carries derivative instruments

47

iGATE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

AS OF DECEMBER 31, 2007 AND 2006

on the balance sheet at fair value, determined by reference to quoted market prices. Derivatives are included in other assets and other liabilities based on the instrument’s fair value. The accounting for changes in the fair value of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and, if so, the reason for holding it. The cash flows related to derivative instruments are classified in the consolidated statements of cash flows within operating activities as a component of other items, net.

The Company recorded $2.4 million in other income in 2007 and $1.5 million in other expense in 2006 related to its foreign currency hedging transactions.

(q) Stock-Based Employee Compensation

The Company recognizes compensation expense for all stock-based awards, using a fair value approach as prescribed in SFAS No. 123(R) Share Based Payments. The impact is more fully described in Note 11 Stock Based Compensation.

(r) Currency Translation Adjustment

For all significant foreign operations, the functional currency is the local currency. Assets and liabilities of these operations are translated at the exchange rate in effect at each year-end. Statement of Operations accounts are translated at the average exchange rate prevailing during the year. Translation adjustments arising from the use of differing exchange rates from period to period are included as a component of other comprehensive loss. Gain and losses from foreign currency transactions are included in other income (expense), net for the periods presented.

Foreign exchange gains or losses on intercompany loans from the Company to its operating subsidiaries are recorded as a component of other income if payment is expected in the foreseeable future based upon mutually agreed upon payment terms.

(s) Revenue Recognition

The Company recognizes revenue on time-and-materials contracts as the services are performed. Revenue is earned when the Company’s consultants are working on projects. Revenue recognition is negatively impacted by national holidays and consultant vacation and sick days. Revenues on fixed-price contracts are recognized using the proportional performance method. Performance is determined by relating the actual cost of work performed to date to the estimated total cost for each contract and revenue is recognized based upon costs incurred by the Company’s consultants during the period. The Company follows this revenue recognition method for fixed-price contracts because there is a direct and consistent relationship between the service patterns and services provided to the customer and the direct costs incurred to provide such services. If the Company’s cost estimates indicate a loss on a particular fixed-price contract, we record a provision for the estimated loss without regard to the stage of completion. Changes in job performance, conditions and estimated profitability may result in revisions to costs and revenues and are recognized in the period in which the changes are identified. Contracts with deliverables or project milestones recognize revenue as the deliverables or project milestones are achieved. Contracts with deliverables or project milestones can provide for certain penalties if the deliverables or project milestones are not met within contract timelines. Certain maintenance type contracts with no stated deliverables, with a designated workforce assigned, recognize revenues on a straight-line basis over the life of the contract, which are typically one year in duration. Revenue on these contracts is ratable and predetermined based upon the negotiated contract.

48

iGATE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

AS OF DECEMBER 31, 2007 AND 2006

In certain client situations, where the nature of the engagement requires it, we utilize the services of other companies in our industry. If these services are provided under an arrangement whereby we agree to retain only a fixed portion of the amount billed to the client to cover our management and administrative costs, we classify the amount billed to the client as subcontractor revenue. These revenues, however, are recorded on a gross versus net basis because we retain credit risk and are the primary obligor to our client. All revenue derived from services provided by our employees or other independent contractors who work directly for us are recorded as direct revenue.

(t) Software Implementation Costs

The Company accounts for costs incurred for its own information systems upgrades in accordance with Statement of Position 98-1 (SOP 98-1) “Accounting for the Costs of Computer Software Developed or Obtained for Internal Use”. SOP 98-1 requires that both internal and external costs incurred during the preliminary project stage should be charged to operations as incurred. Such costs incurred during the application development stage should be capitalized; training costs incurred in this stage should, however, be expensed. Costs of upgrades and enhancements should be capitalized (but only during the application development stage) if it is probable that the expenditures will result in added functionality for the software. During the post-implementation/operation stage, training costs (both internal and external) and maintenance costs should be charged to operations.

(u) Issuance of Stock by Subsidiaries

All issuances of subsidiary stock options or restricted stock and stock compensation expense recorded in accordance with SFAS 123(R) are treated as equity transactions.

(v) Acquisitions

The Company’s acquisitions are accounted for using the purchase method. The purchase price is allocated to the assets acquired and liabilities assumed based on their estimated fair market values. Any excess purchase price over the fair market value of the net assets acquired is recorded as goodwill. For all acquisitions, operating results are included in the Consolidated Statements of Operations since the dates of the acquisitions. See Note 12 for additional information.

(w) Income Tax Uncertainties

In June 2006, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement 109” (“FIN 48”). This statement clarifies the criteria that an individual tax position must satisfy for some or all of the tax benefits of that position to be recognized in a company’s financial statements. FIN 48 prescribes a recognition threshold of more-likely-than-not, and a measurement attribute for all tax positions taken or expected to be taken on a tax return, in order for those tax positions to be recognized in the financial statements. The Company adopted the provisions of FIN 48 on January 1, 2007. There was no material effect on the financial statements. The Company recorded a cumulative effect adjustment to retained deficit of $0.6 million related to adopting FIN 48. Also, certain amounts were reclassified in the statement of financial position in order to comply with the requirements of the statement.

As of January 1, 2007, the Company provided a liability of $1.0 million for unrecognized tax benefits related to various federal and state income tax matters. Of this amount, the amount that would impact the company’s effective rate, if recognized, is $0.7 million. The difference between the total amount of the unrecognized tax benefits and the amount that would impact the effective tax rate consists of items that are offset

49

iGATE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

AS OF DECEMBER 31, 2007 AND 2006

by deferred tax assets, and the federal tax benefit of state income taxes. A reconciliation of the beginning and ending amounts of the tax liability for unrecognized tax benefits is as follows:

	Income Tax			Accrued Interest & Penalties			Unrecognized Income Tax Benefits
	(in thousands)
Balance, January 1, 2007	$	772		$	181		$	953
Additions for tax positions of the current year		255			145			400
Additions for tax positions of prior year		114			97			211
Reductions for tax positions of prior years:
Settlements during period		(49	)		(9	)		(58	)
Balance, December 31, 2007	$	1,092		$	414		$	1,506

The Company and its subsidiaries file income tax returns in the US federal and various state and foreign jurisdictions. With few exceptions, the Company is no longer subject to tax examinations by the tax authorities of any of these jurisdictions for any years before 2004. The expiration of the statute of limitations for various jurisdictions is expected to reduce the liability for unrecognized tax benefits by less than $0.1 million within the next twelve months.

The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in income tax expense. The liability for unrecognized tax benefits included accrued interest of $0.2 million and $0.1 million, and accrued penalties of $0.2 and $0.1 at December 31, 2007 and January 1, 2007, respectively.

(x) Discontinued Operations

The Company adopted SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” (“SFAS 144”) effective January 1, 2002. This standard establishes accounting and reporting requirements for the impairment or disposal of long-lived assets. The Company will apply the provisions of SFAS 144 related to the divestiture of its Professional Services business as discontinued operations, effective beginning as of January 1, 2008.

(y) Net Income per Share

The Company calculates net income per share based on the weighted average number of common shares outstanding and restricted shares included in this calculation are determined using the treasury stock method.

(z) Recently Issued Accounting Standards

In December 2007, the FASB issued SFAS 141(R), Business Combinations (“SFAS 141R”). SFAS 141R replaces SFAS 141, Business Combinations and applies to all transactions or other events in which an entity obtains control of one or more businesses. SFAS 141R requires the acquiring entity in a business combination to recognize all (and only) the assets acquired and liabilities assumed in the transaction; establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed; and requires the acquirer to disclose additional information needed to evaluate and understand the nature and financial effect of the business combination. SFAS 141R is effective prospectively for fiscal years beginning after December 15, 2008 and may not be applied before that date. The Company is currently evaluating the impact of adopting this statement on its Consolidated Financial Statements.

50

iGATE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

AS OF DECEMBER 31, 2007 AND 2006

In December 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51. SFAS No. 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008, with earlier adoption prohibited. This statement requires the recognition of a noncontrolling interest (minority interest) as equity in the consolidated financial statements and separate from the parent’s equity. The amount of net earnings attributable to the noncontrolling interest will be included in consolidated net income on the face of the income statement. The statement also amends certain of ARB No. 51’s consolidation procedures for consistency with the requirements of SFAS No. 141(R). This statement also includes expanded disclosure requirements regarding the interests of the parent and its noncontrolling interest. The Company is currently evaluating the impact of adopting this Statement on its Consolidated Financial Statements.

In February 2007, the Financial Accounting Standards Board 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 permits entities to choose to measure eligible items at fair value at specified election dates and report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. The Company is currently evaluating the impact of adopting this Statement on its Consolidated Financial Statements.

In September 2006, the Financial Accounting Standards Board issued FASB Statement No. 157 “Fair Value Measurements” (“FASB 157”). This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. This Statement applies under other accounting pronouncements that require or permit fair value measurements, but does not require any new fair value measurements. However, for some entities, the application of this Statement will change current practice. This Statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. Earlier application is encouraged, provided that the reporting entity has not yet issued financial statements for that fiscal year, including financial statements for an interim period within that fiscal year. The Company is currently evaluating the effect of the provision of this statement on its Consolidated Financial Statements.

2. Cash and Investments

The Company has short-term investments consisting of money market funds that totaled $25.3 million and $31.8 million at December 31, 2007 and 2006, respectively. Approximately $25.3 million and $6.8 million of these funds at December 31, 2007 and 2006 are to be used exclusively by iGS due to Indian governmental restrictions.

There were no restrictions on cash in 2007, when the Company’s Credit Facility was renewed. The Credit Facility is more fully discussed in Note 7.

3. Derivative Instruments and Hedging Activities

Summarized below are derivative instruments consisting of foreign exchange contracts, currency option contracts and principal only SWAP agreements whose carrying values were adjusted to their fair value at December 31, 2007. Fair values are based on quoted market prices at prevailing exchange rates and other available market information.

51

iGATE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

AS OF DECEMBER 31, 2007 AND 2006

LIST OF OUTSTANDING HEDGE TRANSACTIONS ON DECEMBER 31, 2007

	Maturity Date Ranges	Strike Price at Rupee Rate Ranges	Amount		Option	Net Unrealized Gains/(Losses) December 31, 2007
			(Dollars in thousands)
FORWARD CONTRACTS—USD
From:	January 29, 2008	39.57
To:	December 31, 2008	42.28
Subtotal			$	21,000		$	403
CURRENCY OPTION CONTRACTS—USD
From:	January 29, 2008	41.77	$	10,000	Buy/Sell Put
To:	August 31, 2009	43.00	$	9,000	Buy/Sell Call
Subtotal			$	19,000		$	1,148
FORWARD CONTRACTS—CAD
From:	January 31, 2008	38.72
To:	May 28, 2008	40.43
Subtotal			$	6,000		$	(77	)
Total						$	1,474

The net unrealized gains/(losses) were calculated using a Rupee exchange rate of 39.401.

As of December 31, 2007, iGATE Global Solutions Limited’s (“iGS”) forward contracts to hedge intercompany cash flows will all mature by December 31, 2008. As each contract matures, iGS will receive Rupees at the contracted (“strike price”) rate while delivering either the U.S. Dollar (“USD”) or Canadian Dollar (“CAD”) equivalent of Rupees at the prevailing Rupee exchange rate. Contracts that meet qualifying criteria are accounted for as foreign currency cash flow hedges. Accordingly, the effective portion of gains and losses is deferred as a component of other comprehensive income and is recognized in earnings at the time the hedged item affects earnings. Any gains and losses due to hedge ineffectiveness or related to contracts which do not qualify for hedge accounting are recorded in current period earnings in “other income and expense”. At December 31, 2007 all of the contracts outstanding met qualifying criteria to receive hedge accounting and have been deemed to be effective. As a result, for the year ended December 31, 2007, iGS has appropriately recorded other comprehensive income of $0.3 million. For the year ended December 31, 2006, iGS recognized a gain of $0.6 million.

As of December 31, 2007, iGS’ option contracts to hedge intercompany cash flows will all mature by August 31, 2009. As each contract matures and dependent upon prevailing Rupee exchange rates, iGS will either buy USDs or CADs at each contracted “put” strike price or sell USDs or CADs at each contracted “call” strike price. Contracts that meet qualifying criteria are accounted for as foreign currency cash flow hedges. Accordingly, the effective portion of gains and losses is deferred as a component of other comprehensive income and is recognized in earnings at the time the hedged item affects earnings. Any gains and losses due to hedge ineffectiveness or related to contracts which do not qualify for hedge accounting are recorded in current period

52

iGATE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

AS OF DECEMBER 31, 2007 AND 2006

earnings in “other income and expense”. At December 31, 2007 none of the contracts entered prior to July 1, 2007 were outstanding. Contracts entered into subsequent to July 1, 2007 met qualifying criteria to receive hedge accounting and have been deemed to be effective. As a result, for the year ended December 31, 2007, iGS has appropriately recorded other comprehensive income of $1.2 million. For the year ended December 31, 2006, iGS recognized a gain of $0.9 million.

As of December 31, 2007, iGS’ there are no outstanding principal swaps to hedge intercompany debt from iGS to the Company. Contracts that meet qualifying criteria are accounted for as foreign currency cash flow hedges. Accordingly, the effective portion of gains and losses is deferred as a component of other comprehensive income and is recognized in earnings at the time the hedged item affects earnings. Any gains and losses due to hedge ineffectiveness or related to contracts which do not qualify for hedge accounting are recorded in current period earnings in “other income and expense”. At December 31, 2007, there were no principal only swaps outstanding. For the year ended December 31, 2006, iGS recognized a loss of ($0.3) million.

4. Investments in Unconsolidated Affiliates

The Company’s investments in unconsolidated affiliates, and its percentage of ownership interests, are presented at December 31, 2007, 2006 and 2005, respectively. The investments are grouped by the applicable method of accounting. All ownership interests set forth on the table have been calculated based on the issued and outstanding common stock of each entity, assuming the issuance of common stock on the conversion or exercise of preferred stock and convertible notes, but excluding the effect of unexercised options and warrants.

	Percentage Owned December 31,
	2007		2006		2005
Cost method of accounting:
Air2Web, Inc. (Air2Web)**	7	%	7	%	14	%
Peopleclick, Inc.***	1	%	1	%	1	%
The Concours Group****	0	%	4	%	4	%
Equity method of accounting:
Software AG (India) Private Ltd.	47	%	41	%	41	%
TAC Staffing Services India Private Ltd	50	%	—	%	—	%

** During 2003 and 2002, the Company recorded impairment charges against its investment in Air2Web due to the Company’s belief that there was an other-than-temporary decline in the value of the security. In addition, the Company’s investments in Ordercare, Inc. (“Ordercare”), Bluewater Information Convergence, Inc. (“Bluewater”), Brainbench, Inc. (“Brainbench”), Xpede, Inc. (“Xpede”) and Escend Technologies, Inc. (“Escend”) have been impaired in prior periods to reflect the Company’s belief that no return on capital will be realized.

*** On August 19, 2002, itiliti, a company that was acquired in 2001, sold its assets and liabilities to Peopleclick, Inc. (“Peopleclick”) for approximately 3% of Peopleclick’s outstanding common stock. The Company has a $0 basis in its itiliti shares and has continued to assign a $0 basis to its investment in itiliti. Prior to the August 2002 sale of Peopleclick, the Company owned 49% of itiliti.

**** During the second quarter of 2007 and the fourth quarter of 2005, the Company recorded impairment charges related to its investment in Concours.

53

iGATE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

AS OF DECEMBER 31, 2007 AND 2006

Carrying Value and Cost Basis of Investments in Unconsolidated Affiliates

The following table summarizes the Company’s investments in unconsolidated affiliates as of December 31, 2007 and 2006. Ownership interests are classified according to applicable accounting methods.

	December 31, 2007				December 31, 2006
	Carrying Value		Cost Basis		Carrying Value		Cost Basis
	(Dollars in thousands)
Equity method of accounting	$	1,005	$	359	$	808	$	191
Cost method of accounting		—		3,020		590		3,020
	$	1,005	$	3,379	$	1,398	$	3,211

All equity method investments are deemed to be immaterial to the financial operations of the Company.

Gain (Loss) on Venture Investments and Affiliated Companies

In 2007, the Company received $0.4 million of cash from an escrow account related to a prior sale of a business. The cash received was recognized as a gain on venture investments and affiliated companies.

In 2007, Concours Group Inc., a company in which the Company invested $3.1 million in 2003, was sold. The Company received no proceeds as a result of the sale because other investors had preferential rights to the sale proceeds. The Company recorded as impairment of its remaining investment of $0.6 million was recorded in the second quarter of 2007 as a loss on venture investments and affiliated companies.

In 2005, the Company sold its remaining shares of ScanSoft realizing a gain of approximately $0.3 million. The Company evaluated its investment in Concours and based upon their evaluation recorded an impairment charge on their investment in the amount of $2.5 million. The Company’s evaluation considered Concours’ operating results, operating cash flow as well as future operating budgets and forecasts.

Equity in Income of Affiliated Companies

The Company incurred equity income related to the Software AG joint venture of less than $0.1 million in 2007 and income of $0.3 million in 2006.

Gain on Sale of Stock of Subsidiaries

On December 24, 2007, the Company sold its wholly owned affiliate jobcurry Systems Private, Ltd. “jobcurry” for total net cash proceeds of $1.0 million. The Company recognized a gain on the sale of its subsidiaries in the amount of $0.1 million. The sale of jobcurry was not a material disposition and did not require pro-forma disclosure.

On November 15, 2005, the Company sold its wholly owned affiliate, iGATE Mastech Ltd. (“Canada”) for total net proceeds of $9.3 million. On the closing date, the Company received $8.4 million in net cash and $0.9 million in the form of a promissory note and an escrow account that was to be paid once certain conditions subsequent to closing were met. Subsequent to the closing date the Company received $0.5 million of the escrow funds. The promissory note to the Company of $0.4 million was paid in full in 2007. The Company recognized a gain on the sale of stock of its subsidiaries in the amount of $5.5 million. The sale of Canada was not a material disposition and did not require pro-forma disclosure.

54

iGATE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

AS OF DECEMBER 31, 2007 AND 2006

Components of Other Comprehensive Loss on Available for Sale Securities

The following table summarizes the Company’s changes in other comprehensive loss on available for sale securities as of December 31, 2007, 2006 and 2005 (in thousands):

	2007		2006		2005
Reclassification adjustment for gains realized in net income	$	—	$	—	$	(65	)
Change in other comprehensive income	$	—	$	—	$	(65	)

5. Goodwill and Intangible Assets

In 2007, the Company recorded a net goodwill impairment charge of approximately $2.0 million related to its July 2006 majority acquisition of LoanPro. The gross amount of goodwill recorded in conjunction with the LoanPro acquisition totaled approximately $2.1 million, which was offset by approximately $0.2 million in a note payable owed by LoanPro to its minority shareholders which was forgiven by the minority shareholders.

LoanPro lost its largest customer in the quarter ended June 30, 2007 and as a result of this triggering event, the Company concluded that the goodwill associated with the acquisition should be impaired. There were no other significant costs associated with the impairment charge.

The following tables present the reconciliation of changes in the carrying value of goodwill and amortizable intangible assets for the years ended December 31, 2007 and 2006 (in thousands):

	iGATE Solutions			iGATE Professional Services		iGATE Corporate		Consolidated
Goodwill at December 31, 2005	$	8,062		$	216	$	573	$	8,851
Acquisitions		1,874			—		—		1,874
Foreign currency translation effect		289			—		—		289
Goodwill at December 31, 2006	$	10,225		$	216	$	573	$	11,014
Purchase price adjustment		(201	)		—		—		(201	)
Acquisitions		26,408			—		—		26,408
Goodwill impairment		(1,950	)		—		—		(1,950	)
Foreign currency translation effect		1,291			—		—		1,291
Goodwill at December 31, 2007	$	35,773		$	216	$	573	$	36,562

	December 31, 2007				December 31, 2006
	Gross Amount		Accumulated Amortization		Gross Amount		Accumulated Amortization
Amortizable intangible assets:
Intellectual property	$	570	$	570	$	570	$	570
Customer relationships		6,642		5,639		6,642		4,936
Employment contracts		1,720		1,720		1,720		1,480
Other costs		314		314		314		314
Total	$	9,246	$	8,243	$	9,246	$	7,300

55

iGATE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

AS OF DECEMBER 31, 2007 AND 2006

Amortization expense related to identifiable intangible assets was $0.9 million, $1.6 million and $2.4 million for the years ended December 31, 2007, 2006 and 2005, respectively. Estimated annual amortization for the years ended December 31, 2008 and 2009 is shown below (in thousands):

2008	$	694
2009	$	309

6. Restructuring Charges

In 2007, the Company restructured its Shared Services operations. The Company incurred $0.8 million of severance and related costs.

In 2006, the Company recovered $0.6 million related to its 2001 restructuring.

In 2004, the Company restructured its Canadian and United Kingdom operations. The Company incurred $0.9 million of early exit costs associated with its Toronto, Canada office. The Company incurred approximately $4.9 million related to the closing of its Red Brigade Ltd. office in Bracknell, UK, which was comprised of $4.6 million of early exit costs associated with the closing and $0.3 million of non cash charges related to write-offs of leasehold improvements associated with the leased property. In 2005, the Company sold its Canadian operation and recovered $0.5 million of costs that were previously recorded as restructuring expenses. In 2006, the Company recovered $2.5 million related to its United Kingdom restructuring.

The components of the restructuring charges and the restructuring accrual at December 31, 2007, 2006 and 2005 are as follows:

(in thousands)	Accrued December 31, 2004		Credited to Expense			Foreign Currency Translation Effect			Cash Expenditures			Accrued December 31, 2005
2004 lease costs of office closure	$	5,354	$	(386	)$		(417	)	$	(692	)	$	3,859
2002 lease costs of office closure		382		—			—			(314	)		68
2001 severance, bonus and related items		610		—			—			(610	)		—
2001 lease costs of office closure		1,123		(95	)		(2	)		(176	)		850
Total	$	7,469	$	(481	)	$	(419	)	$	(1,792	)	$	4,777
	Accrued December 31, 2005		Credited to Expense			Foreign Currency Translation Effect			Cash Expenditures			Accrued December 31, 2006
2004 lease costs of office closure	$	3,859	$	(2,507	)	$	471		$	(1,326	)	$	497
2002 lease costs of office closure		68		—			—			(68	)		—
2001 lease costs of office closure		850		(555	)		—			(295	)		—
Total	$	4,777	$	(3,062	)	$	471		$	(1,689	)	$	497

56

iGATE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

AS OF DECEMBER 31, 2007 AND 2006

(in thousands)	Accrued December 31, 2006		Charged to Expense		Foreign Currency Translation Effect		Cash Expenditures			Accrued December 31, 2007
2004 lease costs of office closure	$	497	$	—	$	46	$	(241	)	$	302
2007 severance and related items		—		769		—		(13	)		756
Total	$	497	$	769	$	46	$	(254	)	$	1,058

7. Credit Facilities

On August 22, 2007, the Company renewed its credit facility (“Renewed Facility”) with PNC Bank N.A. (“PNC”). The Renewed Facility provides a maximum loan amount of $35.0 million and is unsecured. The provisions of the Renewed Facility requires the Company to maintain domestic cash and cash equivalents and short-term investments of at least $35.0 million, maintain net tangible worth of at least $100.0 million and maintain a liquidity ratio of not less than 1.5 to 1.0. The liquidity ratio is the sum of domestic cash and accounts receivable divided by total liabilities. The Company is prohibited from paying dividends under the PNC Facility. In order to effect the delisting of iGS from the public stock exchange in India, the Company transferred cash from the USA to India for the repurchase of shares from the public shareholders of iGS. This transfer of cash resulted in a violation of a financial covenant under the PNC Facility. The Company was granted a waiver by PNC and the current waiver extends through March 31, 2008. The Company expects to modify certain covenants in the Renewed Facility in connection with the divestiture of iPS. The Company had no outstanding borrowings against the Renewed Facility as of December 31, 2007 and December 31, 2006, but the Company did have letters of credit outstanding in the amount of $0.4 million and $0.4 million as of December 31, 2007 and 2006, respectively.

8. Commitments

Lease Commitments

The Company rents certain office facilities and equipment under noncancelable operating leases, which provide for the following future minimum rental payments as of December 31, 2007:

	Total Amount
	(dollars in thousands)
Period ending December 31,
2008	$	4,195
2009		3,176
2010		2,255
2011		1,472
2012		1,153
Thereafter		2,955
Total	$	15,206

Rental expense was approximately $7.3 million, $6.2 million and $6.6 million for the years ended December 31, 2007, 2006 and 2005, respectively.

57

iGATE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

AS OF DECEMBER 31, 2007 AND 2006

Other Commitments

We have plans for a Phase IV expansion of our campus located in Bangalore, India. Total estimated costs of the project will approximate $25 million and will be paid out over the next 30 months. Phase I was completed in February 2004, Phase II was completed in December 2005 and Phase III was completed in January 2007. We have funded entire the project to date through a combination of available cash reserves and short-term investments and expect to fund the costs of Phase IV through our net cash flows provided by operations.

In order to complete the delisting of iGS from the public stock exchanges in India and to complete the repurchase of all shares associated with this transaction, the Company will use approximately $30.0 million in cash in 2008 for this specific purpose. The Company will fund all monies through a combination of existing cash reserves and short term investments.

As part of the Company’s acquisition of a 95% interest in ICRI, the Company may be required to fund their existing operations for an amount up to $3.0 million, based upon mutually agreed upon operating needs. The Company funded $0.9 million, $0.5 million and $0.3 million in 2007, 2006 and 2005 respectively, and may be required to fund ICRI operations in 2008 and in subsequent years.

9. Contingencies

In the ordinary course of our business, the Company is involved in a number of lawsuits and administrative proceedings. While uncertainties are inherent in the final outcome of these matters, Company management believes, after consultation with legal counsel, that the disposition of these proceedings should not have a material adverse effect on our financial position, results of operations or cash flows.

iGS has entered in to a service agreement with a customer that provides the customer the option to take an equity stake in iGS for up to 5% of iGS’s outstanding voting shares. The customer may purchase iGS shares solely at their discretion and must notify iGS of their intention to purchase within thirty days of the purchase.

10. Employee Benefit Plan

The Company has an Employee Retirement Savings Plan (the “Retirement Plan”) under Section 401(k) of the Internal Revenue Code that covers substantially all U.S. based salaried employees. Eligible employees may contribute up to 15% of eligible compensation, subject to limits in the Internal Revenue Code. The Retirement Plan does not provide for any Company matching contributions.

11. Stock Based Compensation

iGS/iGATE Exchange Options

Consequent to the delisting of iGS from the Indian stock exchanges, iGS exchanged 2.3 million of iGS employee stock options for 2.8 million of iGATE stock options on December 7, 2007. The exchange was not mandatory and was solely the prerogative of each employee. All iGS stock options were time based vesting and none of them had any performance conditions and similarly all iGATE options granted in exchange had only time based service conditions for vesting.

The exchange ratio was computed as 1.202 iGATE options for every iGS option. This was arrived considering a price of approximately $10.40 for each for iGS option, and $8.66 for iGATE shares, the closing price of the Company’s stock on December 7, 2007.

58

iGATE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

AS OF DECEMBER 31, 2007 AND 2006

The iGATE options issued are replacement awards for original iGS options, and as such, are treated as modification in accordance with SFAS No. 123(R). Hence, the fair value of the exchange options was estimated at the date of exchange and the incremental fair value of $0.5 million will be amortized on a straight-line basis over the requisite service periods of the awards.

The Company also paid $8.3 million towards redemption of iGS vested options at their fair market values. The amount was recorded as a reduction of Additional Paid-in Capital in the Consolidated Statements of Shareholders’ Equity and Comprehensive Income (Loss).

Purusant to the delisting of iGS from the Indian stock exchanges and the exchange of iGS stock options with iGATE options, no further options will be granted under any of the iGS stock option plans.

iGATE Corporation Stock Option Plans

Stock Based Compensation

In December 2004, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 123(R), which requires compensation costs related to share-based transactions, including employee share options, to be recognized in the financial statements based on fair value. SFAS No. 123(R) revised SFAS No. 123, as amended, Accounting for Stock-Based Compensation, and supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees.

Effective January 1, 2006, the Company adopted the provisions of SFAS No. 123(R) using the modified prospective transition method. Under this transition method, the compensation cost recognized beginning January 1, 2006 includes compensation cost for (i) all share-based payments granted prior to, but not yet vested as of January 1, 2006, based on the grant-date fair value estimated in accordance with the original provisions of SFAS No. 123, and (ii) all share-based payments granted subsequent to December 31, 2005 based on the grant-date fair value estimated in accordance with the provisions of SFAS No. 123(R). Compensation cost is generally recognized ratably over the requisite service period or the retirement date for retirement eligible employees, if earlier. Prior period amounts have not been restated.

As a result of the adoption of SFAS No. 123(R), the Company’s results for the years ended December 31, 2007 and 2006 include share-based compensation expense of $4.4 million and $4.0 million, respectively. The total stock-based compensation cost included in the Consolidated Statements of Operations within direct costs for the years ended December 31, 2007 and 2006 was $1.9 million and $1.8 million, respectively. The total stock-based compensation cost included in the Consolidated Statements of Operations within selling, general and administrative expenses for the years ended December 31, 2007 and 2006 was $2.5 million and $2.2 million, respectively. The Company has recognized a related tax benefit associated with its share-based compensation arrangements for the years ended December 31, 2007 and 2006 of $0.2 million and $0.1 million, respectively.

59

iGATE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

AS OF DECEMBER 31, 2007 AND 2006

Prior to January 1, 2006, the Company accounted for stock-based compensation plans in accordance with the provisions of APB Opinion No. 25, as permitted by SFAS No. 123, and accordingly did not recognize compensation expense for the issuance of options with an exercise price equal to or greater than the market price at the date of grant. The Company did recognize $0.8 million of compensation expense for the year ended December 31, 2005 related to a restricted stock grant and discounted stock options. Had the fair value based method as prescribed by SFAS No. 123 been applied by the Company, the effect on net income and earnings per share for the year ended December 31, 2005 would have been as follows ($ in thousands, except per share data):

	Year Ended December 31, 2005
Net income, as reported	$	6,969
Add: Deferred compensation expense reported in earnings		815
Less: Total stock-based employee compensation expense determined under fair value method for all awards and deferred compensation expense		(2,385	)
Proforma net income	$	5,399
Earnings per share:
Basic and diluted
As reported	$	0.13
Pro forma	$	0.10

iGATE Corporation Stock Incentive Plans

During 2000, the Company adopted the Second Amended and Restated Stock Incentive Plan (the “Plan”). The Plan provided that up to 14.7 million shares of the Company’s common stock shall be allocated for issuance to directors, executive management and key personnel. At December 31, 2005, there were 10.2 million shares of common stock available for issuance under the Plan. This plan expired by its terms on November 3, 2006.

On May 25, 2006, the 2006 iGATE Corporation Stock Incentive Plan (the “2006 Plan” and together with the Plan, the “iGATE Plans”) was approved by the Company’s shareholders. This 2006 Plan replaced the Company’s expired Plan and is substantially similar to it. Revisions were made primarily to address changes in applicable law since 2000. The 2006 Plan provides that up to 14.7 million shares of the Company’s common stock shall be allocated for issuance to officers, employees, directors and consultants of the Company and its subsidiaries. At December 31, 2007, there were 11.1 million shares of common stock available for issuance under the 2006 Plan.

60

iGATE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

AS OF DECEMBER 31, 2007 AND 2006

A summary of the stock option and restricted stock activity is presented below:

iGATE Stock Incentive 1996 Plan	Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in millions)
Options outstanding at December 31, 2004	2,574,319		$	6.75
Granted	204,500			3.98
Exercised	(254,190	)		3.34
Lapsed and forfeited	(323,422	)		6.44
Options outstanding at December 31, 2005	2,201,207		$	6.93
Granted	100,000			5.41
Exercised	(250,032	)		3.47
Lapsed and forfeited	(364,917	)		9.99
Options outstanding at December 31, 2006	1,686,258		$	6.68
Granted	—			—
Exercised	(499,137	)		8.80
Lapsed and forfeited	(51,320	)		6.56
Options outstanding at December 31, 2007	1,135,801		$	8.31	4.7	$	3.4
Options vested and expected to vest at December 31, 2007	1,116,150		$	8.39	4.4	$	3.4
Options exercisable at December 31, 2007	864,144		$	9.67	3.9	$	2.2
iGATE Stock Incentive 2006 Plan	Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in millions)
Options outstanding at December 31, 2005	—			—
Granted	15,000		$	6.00
Exercised	—			—
Lapsed and forfeited	—			—
Options outstanding at December 31, 2006	15,000		$	6.00
Granted	159,000		$	8.21
Exercised	—			—
iGS/iGATE Exchange	2,763,464			1.43
Options outstanding at December 31, 2007	2,937,464		$	1.80	9.6	$	19.6
Options vested and expected to vest at December 31, 2007	2,784,239		$	1.82	6.2	$	18.6
Options exercisable at December 31, 2007	19,658		$	5.74	9.1	$	0.1

61

iGATE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

AS OF DECEMBER 31, 2007 AND 2006

iGATE Stock Incentive 2006 Plan	Restricted Stock		Weighted Average Fair Value
Unvested at December 31, 2005	—
Granted	571,000		$	4.27
Unvested at December 31, 2006	571,000		$	4.27
Granted	96,000			—
Vested	(114,000	)		6.89
Lapse and forfeited	(31,500	)		4.27
Unvested at December 31, 2007	521,500		$	—
Available for future grant	11,127,036

During 2007 and 2006, the Company granted 0.1 million and 0.6 million shares of performance based restricted stock, respectively. Each share is earned only after certain financial targets are met. Each performance target is assessed yearly over a four year to five year period, at which time the shares will be awarded upon achievement of the yearly target. If the performance targets are not met, the shares that were to be awarded for the performance year will be cancelled. If the performance target is achieved, the shares are issued to the recipient. These shares are voting but are subject to forfeiture if performance targets are not achieved or in the event of termination.

During 2007, 2006 and 2005, options covering a total of 0.2 million shares, 0.1 million shares and 0.2 million shares, respectively, of Common Stock were granted under the Plan. On December 7, 2007, 2.8 million iGATE stock options were exchanged for 2.3 million of iGS stock options. Options generally expire ten years from the date of the original grant or earlier if an option holder ceases to be employed or associated by the Company for any reason.

Compensation expense associated with the performance based grants that continue to vest based upon future performance is measured based on the grant-date fair value of iGATE common stock. Compensation expense is recognized ratably over the performance period based upon the Company’s estimated achievement of the established performance criteria. Compensation expense is only recognized for those awards that are expected to vest, which is estimated based upon the assessment of both the probability that the performance criteria will be achieved and current period and historical forfeitures.

The total intrinsic value of options exercised during 2007, 2006 and 2005 was $2.9 million, $0.6 million and $0.2 million, respectively. The fair value of stock options vested during 2007, 2006 and 2005 was $1.6 million, $0.8 million and $1.1 million, respectively. The income tax benefit classified as a financing cash inflow for 2007, 2006 and 2005 was $0.2 million, $0.1 million and less than $0.1 million, respectively.

In 2007, the Company recognized $1.6 million of compensation expense associated with the iGATE stock incentive plan in the Company’s Condensed Consolidated Statements of Operations compared to $0.9 million in 2006. As of December 31, 2007, approximately $15.0 million of unrecognized compensation cost is expected to be recognized for the unvested shares. This expense is expected to be recognized over a weighted-average period of 2.1 years.

62

iGATE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

AS OF DECEMBER 31, 2007 AND 2006

iGATE Stock Options Outstanding at December 31, 2007:

iGATE Stock Incentive 1996 Plan

Options Outstanding					Options Exercisable
Range of Exercise Price	Options	Weighted Average Remaining Contractual Life (Years)	Weighted Average Exercise Price		Options	Weighted Average Exercise Price
$  1.875–$   2.010	58,392	3.65	$	1.939	58,392	$	1.939
2.960–     2.960	140,638	6.57		2.960	94,700		2.960
3.630–     3.630	33,750	7.62		3.630	7,375		3.630
3.680–     3.680	120,000	6.75		3.680	30,000		3.680
3.780–     4.000	118,500	4.32		3.871	117,406		3.872
4.032–     5.410	210,319	7.56		4.787	102,069		4.760
5.580–   11.750	126,079	4.15		7.792	126,079		7.792
12.375–   15.875	174,138	0.83		14.458	174,138		14.458
17.020–   20.532	114,412	0.67		20.143	114,412		20.143
22.125–   33.125	39,573	0.82		27.269	39,573		27.269
$  1.875–$  33.125	1,135,801	4.48	$	8.314	864,144	$	9.669

iGATE Stock Incentive 2006 Plan

Options Outstanding					Options Exercisable
Range of Exercise Price	Options	Weighted Average Remaining Contractual Life (Years)	Weighted Average Exercise Price		Options	Weighted Average Exercise Price
$  0.080–$  0.080	1,983,707	5.43	$	0.080	0	$	—
2.110–    4.050	378,436	6.98		2.933	335		3.620
4.060–    7.320	268,938	7.61		5.277	19,323		5.776
7.410–    7.410	5,000	9.26		7.410	0		—
8.040–    8.040	72,225	9.27		8.040	0		—
8.240–    8.240	50,000	9.25		8.240	0		—
8.640–    8.640	103,956	9.02		8.640	0		—
8.660–    8.660	1,202	2.05		8.660	0		—
9.000–    9.000	54,000	9.75		9.000	0		—
9.140–    9.140	20,000	9.77		9.140	0		—
$  0.080–$  9.140	2,937,464	6.23	$	1.803	19,658	$	5.739

iGATE options outstanding and exercisable at December 31, 2006 were 1.7 million and 1.1 million, respectively, at prices ranging from $1.875 to $33.125 per share. iGATE options outstanding and exercisable at December 31, 2005 were 2.2 million and 1.5 million, respectively, at prices ranging from $1.875 to $33.125 per share.

In addition, iGATE Global Solutions Limited, the Company’s majority-owned Indian subsidiary (“iGS”) also maintains its own stock option plans. iGS’s stock option plans were approved by its Boards of Directors and are discussed below.

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iGATE CORPORATION

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AS OF DECEMBER 31, 2007 AND 2006

iGS Stock Option Plans

iGS maintains two employee stock option plans herein referred to as “Plan 1” and “Plan 2” and collectively as the “iGS Plans”. The iGS Plans are administered by a committee appointed by the Board of Directors of iGS. Plan 1 provides for the issuance of a maximum of 3.0 million shares of iGS common stock and Plan 2 provides for the issuance of a maximum of 4.5 million shares of iGS common stock. Options to purchase iGS common stock are typically granted at the prevailing market values for each of the iGS Plans.

Options for each of the above iGS Plans generally vest over a four year period and expire ten years from the date of grant or earlier if an option holder ceases to be employed with iGS, iGS’s holding company or any iGS subsidiary companies.

iGATE Global Solutions Stock Option Plan 1	Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in millions)
Options outstanding at December 31, 2004	1,836,623		$	2.68
Granted	112,750			5.21
Exercised	(137,495	)		2.45
Lapsed and forfeited	(319,244	)		4.97
Options outstanding at December 31, 2005	1,492,634		$	3.11
Granted	713,585			4.70
Exercised	(293,180	)		2.30
Lapsed and forfeited	(766,362	)		4.41
Options outstanding at December 31, 2006	1,146,677		$	3.42
Granted	307,000			9.29
Exercised	(213,104	)		2.97
Lapsed and forfeited	(704,437	)		4.74
iGS/iGATE Exchange	(385,115	)		7.14
Options outstanding at December 31, 2007	151,021		$	3.37	5.65	$	—
Options vested and expected to vest at December 31, 2007	125,250		$	2.91	5.65	$	—
Options exercisable at December 31, 2007	125,250		$	2.91	5.65	$	—

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iGATE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

AS OF DECEMBER 31, 2007 AND 2006

iGATE Global Solutions Stock Option Plan 2	Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in millions)
Options outstanding at December 31, 2004	1,992,335		$	5.60
Granted	1,705,150			3.93
Exercised	(5,153	)		4.87
Lapsed and forfeited	(730,098	)		5.34
Options outstanding at December 31, 2005	2,962,234		$	4.68
Granted	—			—
Exercised	(20,330	)		2.50
Lapsed and forfeited	(1,872,163	)		5.18
Options outstanding at December 31, 2006	1,069,741		$	4.34
Granted	—			—
Exercised	(161,951	)		4.28
Lapsed and forfeited	(616,670	)		5.64
iGS/iGATE Exchange	(267,915	)		3.83
Options outstanding at December 31, 2007	23,205		$	4.22	2.80
Options vested and expected to vest at December 31, 2007	18,048		$	3.71	2.80	$	—
Options exercisable at December 31, 2007	18,048		$	3.71	2.80	$	—

iGS also maintains an employee restricted stock unit plan herein referred to as “RSU Plan”. The RSU Plan is administered by the Compensation Committee appointed by the Board of Directors of iGS. The RSU Plan is a separate plan set up in partial modification of the above iGS Plans and provides for the issuance of a maximum of 3.0 million shares of iGS common stock. These restricted stock units are granted at a $0.08 strike price.

Restricted stock unit grants for the RSU Plan generally vest over a four year period and expire twelve years from the date of grant or earlier if a holder ceases to be employed by or associated with iGS for any reason.

On October 10, 2006, iGS exchanged approximately 1.75 million of iGS employee stock options for approximately 0.5 million of iGS restricted stock units. The proposed exchange was approved by iGS’s Board on October 10, 2006. The exchange was not mandatory and was solely the prerogative of each employee. At the date of the exchange the iGS closing stock price was $4.20.

The fair value of restricted stock unit grants was estimated using the prevailing market value of iGS common stock at the date of grant. The fair value is then amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period. A forfeiture rate is also applied to the estimated compensation cost of the granted restricted stock units. Forfeitures are estimated based on voluntary termination behavior, as well as an analysis of actual option forfeitures.

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iGATE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

AS OF DECEMBER 31, 2007 AND 2006

iGATE Global Solutions Restricted Stock Unit Plan	Restricted Stock Units		Weighted Average Fair Value
Unvested at December 31, 2005	—			—
Granted	919,077		$	5.19
Exercised	—			—
Lapsed and forfeited	(44,931	)		5.19
Unvested at December 31, 2006	874,146		$	5.19
Granted	1,262,350			6.49
Exercised	(18,969	)		4.98
Lapsed and forfeited	(452,943	)		5.20
iGS/iGATE Exchange	(1,646,025	)		6.02
Unvested at December 31, 2007	18,559		$	5.42

Total available stock options and/or restricted units to be granted for all of the iGS Plans combined cannot exceed 7.5 million shares.

The total intrinsic value of options exercised during 2007, 2006 and 2005 was $1.4 million, $0.4 million and $0.4 million, respectively. The fair value of stock options vested during 2007, 2006 and 2005 was $3.9 million, $3.3 million and $2.9 million, respectively.

In 2006, the Company recognized $2.8 million of compensation expense associated with the iGS stock option plans in the Company’s Condensed Consolidated Statements of Operations as compared to $3.1 million in 2006. As of December 31, 2007, no additional compensation cost is expected to be recognized for the unvested shares.

iGATE Global Solutions Stock Options Outstanding at December 31, 2007 Plan 1:

Options Outstanding					Options Exercisable
Range of Exercise Price	Options	Weighted Average Remaining Contractual Life (Years)	Weighted Average Exercise Price		Options	Weighted Average Exercise Price
$  0.00–$  11.00	151,021	5.6 years	$	3.37	125,250	$	2.91

iGATE Global Solutions Stock Options Outstanding at December 31, 2007 Plan 2:

Options Outstanding					Options Exercisable
Range of Exercise Price	Options	Weighted Average Remaining Contractual Life (Years)	Weighted Average Exercise Price		Options	Weighted Average Exercise Price
$  0.00–$  6.80	23,205	2.8 years	$	4.22	18,048	$	3.71

The fair value of each option grant under the iGATE Plans and iGS Plans was estimated using the Black-Scholes option pricing model. The fair value is then amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period. Use of a valuation model requires management to

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iGATE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

AS OF DECEMBER 31, 2007 AND 2006

make certain assumptions with respect to selected model inputs. Expected volatility was calculated based on the historical volatility of either the iGATE or iGS common stock and implied volatility derived from exchange traded options. The average expected life was based on the contractual term of the option and expected employee exercise and post-vesting employment termination behavior. The risk-free interest rate for each of the iGATE Plans was based on U.S. Treasury zero-coupon issues with a remaining term equal to the expected life assumed at the date of grant. The risk-free rate for each of the iGS Plans was based on an equivalent Indian risk-free rate. Forfeitures are estimated based on voluntary termination behavior, as well as an analysis of actual option forfeitures. The weighted-average assumptions used in the Black-Scholes option pricing model are as follows:

Year Ended December 31, 2007	iGATE			iGS
Weighted average fair values of options granted during 2007	$	4.79		$	7.13
Risk-free interest rate		4.34	%		6.60	%
Expected dividend yield		0.0	%		0.5	%
Expected life of options		4.5 years			5 years
Expected volatility rate		61.0	%		58.7	%
Year Ended December 31, 2006	iGATE			iGS
Weighted average fair values of options granted during 2006	$	3.17		$	2.60
Risk-free interest rate		4.65	%		7.00	%
Expected dividend yield		0.0	%		0.5	%
Expected life of options		4.5 years			5 years
Expected volatility rate		66.5	%		61.8	%
Year Ended December 31, 2005	iGATE			iGS
Weighted average fair values of options granted during 2005	$	2.76		$	3.01
Risk-free interest rate		4.00	%		4.00	%
Expected dividend yield		0.0	%		0.0	%
Expected life of options		5 years			4 years
Expected volatility rate		85.4	%		63.8	%

12. Acquisitions

The following paragraphs describe each of the acquisitions made by the Company during 2007, 2006 and 2005. Descriptions regarding each acquisition will vary dependent upon the complexity of the transaction and materiality and are presented in chronological order. Unless otherwise noted, pro-forma disclosure regarding these purchases have not been provided because they are not material to the operations of the Company.

The Company has calculated each purchase price allocation in accordance with Statement of Financial Accounting Standards No. 141, Business Combinations. All amortizable intangible assets acquired consist of intellectual property, beneficial employment contracts and customer relationships. Please refer to Note 5 for information pertaining to amortization expense.

In 2007, the Company, being the largest shareholder in iGS, decided to delist iGS from the Indian stock exchanges. As per the delisting guidelines of the Securities and Exchange Board of India, iGS could be delisted only after iGATE and its affiliates acquired over 90% of iGS’ common stock. The Company increased its ownership to 93.4% as of December 31, 2007 by acquiring 4.0 million shares representing 12.65% of iGS outstanding shares from the Indian public at a cost of $42.2 million at a price of approximately $10.40 per share.

67

iGATE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

AS OF DECEMBER 31, 2007 AND 2006

The Company paid the investment banking firm who managed the delisting exercise a fee of $0.5 million, making the total purchase consideration to $42.7 million as of December 31, 2007. The minority interest in the books have been accordingly adjusted by $12.4 million for the 12.65% stake purchased and the excess purchase price has been recognized in the books.

The Company is currently in the process of finalizing the allocation of the excess purchase price. Management is currently evaluating third party appraisals obtained and working on acquiring the remaining outstanding minority shares. Based upon preliminary valuations and the current shares redeemed, the excess purchase price will be allocated to land and buildings of $3.9 million and to goodwill and customer contracts of $26.4 million.

On April 24, 2006, iGS entered into a Master Services Agreement with LoanPro, LLC (“LoanPro”) to perform offshore mortgage servicing. In conjunction with this agreement, iGS acquired a 5% ownership interest in LoanPro for a nominal amount with the option to acquire up to an additional 55%. iGS exercised this option on July 1, 2006 and acquired the additional 55% of LoanPro for a nominal amount. In the third quarter of 2006, iGS consolidated LoanPro’s operations into the iGATE Solutions segment. iGS has loaned $1.1 million to LoanPro as of February 28, 2007. The loan pays 6% interest and is due in 2009. Assets acquired were insignificant and did not require a purchase price allocation. Proforma disclosure was also not required due to immateriality.

During the fourth quarter of 2005, iGS purchased the remaining 51% interest of CIBER, India Pvt. Ltd., (“CIBER”), an India-based joint venture originally started in 2003 by Ciber, Inc. and iGS, for a nominal amount. The acquisition was deemed to be immaterial not requiring pro-forma disclosure. Assets acquired were insignificant and did not require a purchase price allocation.

13. Discontinued Operations

In connection with the divestiture of iPS approved in February 2008, iGATE’s historical and future financial results will now reflect the Professional Services business as discontinued operations, effective beginning as of January 1, 2008.

14. Income Taxes

The components of income (loss) from continuing operations before income taxes, as shown in the accompanying Consolidated Statement of Operations, consisted of the following for the years ended December 31, 2007, 2006 and 2005:

	December 31,
	2007		2006			2005
	(Dollars in Thousands)
Income (loss) before income taxes:
Domestic	$	2,639	$	(357	)	$	4,460
Foreign		15,227		11,310			2,622
Income before income taxes	$	17,866	$	10,953		$	7,082

68

iGATE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

AS OF DECEMBER 31, 2007 AND 2006

The provision (benefit) for income taxes from continuing operations, as shown in the accompanying Consolidated Financial Statements, consisted of the following for the years ended December 31, 2007, 2006 and 2005:

	December 31,
	2007			2006			2005
	(Dollars in Thousands)
Current provision(benefit) :
Federal	$	917		$	1,648		$	(2,239	)
State		708			479			300
Foreign		2,629			410			1,123
Total current provision (benefit)		4,254			2,537			(816	)
Deferred provision (benefit):
Federal		478			(1,213	)		(3,791	)
State		71			(182	)		(519	)
Foreign		(1,753	)		14			463
Valuation allowance		(769	)		1,093			4,776
Total deferred (benefit) provision		(1,973	)		(288	)		929
Total provision for income taxes	$	2,281		$	2,249		$	113

The reconciliation of income taxes computed using the statutory U.S. income tax rate and the provision (benefit) for income taxes from continuing operations for the years ended December 31, 2007, 2006 and 2005 were as follows:

	December 31, 2007					December 31, 2006					December 31, 2005
Income taxes computed at the federal statutory rate	$	6,253		35.0	%	$	3,834		35.0	%	$	2,479		35.0	%
State income taxes, net of federal tax benefit		585		3.3			286		2.6			238		3.4
Foreign taxes at other than U.S. statutory rate.		(4,494	)	(25.2	)		(3,534	)	(32.3	)		668		9.4
Reversal of prior year accrued taxes		—		—			—		—			(2,200	)	(31.1	)
Minority interest		1,049		5.9			263		2.4			739		10.4
Nondeductible goodwill		—		—			55		0.5			145		2.0
Nondeductible compensation		46		0.3			238		2.2			253		3.6
Capital losses in investments		(307	)	(1.7	)		—		—			(6,891	)	(97.3	)
Other—net		(83	)	(0.5	)		14		0.1			(94	)	(1.3	)
Valuation allowance		(768	)	(4.3	)		1,093		10.0			4,776		67.4
	$	2,281		12.8	%	$	2,249		20.5	%	$	113		1.6	%

Under the Indian Income Tax Act, 1961, the Company’s Indian subsidiary is eligible to claim a tax holiday for 10 consecutive assessment years on profits derived from the export of software services from divisions registered under the Software Technology Parks at Bangalore, Chennai, and Pune. For the years ended December 31, 2007, 2006 and 2005 the tax holiday resulted in benefits (taxes) of $4.5 million, $2.7 million and ($0.7) million, respectively, when calculated at the statutory US rate. The majority of the remaining benefits will extend through March of 2009. There are no adverse tax effects to be considered from the goodwill impairment discussed in Note 5 above as it is included as part of the subsidiary’s tax holiday. Non-operating income, such as interest income and capital gains, is not part of the tax holiday, and has been considered as part of our income tax provision.

69

iGATE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

AS OF DECEMBER 31, 2007 AND 2006

The Company and its consolidated subsidiaries have approximately $11.7 million of net operating losses available to offset future state taxable income. In addition, the US branch of the Company’s Indian subsidiary has approximately $6.1 million of net operating losses available to offset future federal and state taxable income. Certain of these net operating losses will expire beginning in 2008.

The components of the deferred tax assets and liabilities were as follows:

	December 31,
	2007			2006
	(Dollars in Thousands)
Deferred tax assets:
Allowance for doubtful accounts and employee advances	$	261		$	452
Accrued health benefits		163			183
Accrued vacation and bonuses		759			861
Depreciation		129			167
Section 123(R) compensation		664			267
Foreign currency translation adjustments		720			713
Capital losses in investments		14,903			14,721
Deferred compensation		5,777			6,202
Net operating loss carryovers		2,742			3,772
Accrued restructuring charges		277			—
Minimum alternate credit–India		1,797			—
Other		21			63
Valuation allowance		(24,277	)		(25,045	)
Total deferred tax assets		3,936			2,356
Deferred tax liabilities
Amortization of acquired intangibles		318			609
Prepaid expenses		308			409
Unrecognized gain on iGATE Global Solutions IPO		9,710			9,710
Total deferred tax liabilities		10,336			10,728
Net deferred tax liability	$	6,400		$	8,372
Net deferred tax liability	$	6,400		$	8,372
Plus: net current deferred tax asset		703			1,111
Net long-term deferred tax liability	$	7,103		$	9,483

During 2007and 2006 the Company adjusted deferred tax assets generated from capital loss transactions through valuation allowances. The Company believes that sufficient future capital gains will not be generated so as to permit the reversal of the deductible temporary differences.

70

iGATE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

AS OF DECEMBER 31, 2007 AND 2006

15. Earnings per Share

The reconciliation between basic and diluted earnings per common share from continuing operations is as follows:

	Year Ended December 31,
	2007		2006		2005
	(in thousands, except per share data)
Basic earnings per share:
Net income from continuing operations	$	15,585	$	8,704	$	6,969
Divided by:
Weighted average common shares		53,333		52,939		52,530
Basic earnings per share from continuing operations	$	0.29	$	0.16	$	0.13
Diluted earnings per share:
Net income from continuing operations	$	15,585	$	8,704	$	6,969
Divided by:
Weighted average common shares		53,972		53,278		52,734
Diluted earnings per share from continuing operations	$	0.29	$	0.16	$	0.13

The number of outstanding options to purchase common shares for which the option exercise prices exceeded the average market price of the common shares aggregated 0.6 million, 0.9 million and 1.1 million shares for the years ended December 31, 2007, 2006 and 2005, respectively. These options were excluded from the computation of diluted earnings per share under the treasury stock method.

16. Segment Reporting

The Company’s reportable segments are iGATE Solutions, iGATE Professional Services and iGATE Shared Services. As of January 1, 2006, jobcurry operations are included in the iPS segment. jobcurry was previously included as part of iGATE Shared Services. All prior periods have been reclassified to reflect the changes to our segment reporting. Accordingly, revenues of $1.3 million, cost of revenues of $0.7 million, gross margin of $0.6 million, selling, general and administrative expenses of $0.7 million and loss from operations of $(0.1) million have been reclassified from the iGATE Shared Services segment to the iPS Segment for 2005.

iGATE Solutions

The iGATE Solutions segment’s services offerings include offshore outsourcing of IT services, IT systems maintenance and Business Process Outsourcing (“BPO”). Other offerings include enterprise applications implementation and related custom development of applications such as Oracle, SAP and PeopleSoft. The Segment also offers application maintenance outsourcing, business intelligence services and data management and application re-engineering through its offshore development centers (“ODCs”).

iGATE Solutions has ODCs located in Bangalore, Hyderabad, Chennai, Delhi, and Pune, India. iGS has global development centers (“GDCs”) located in Canada and the U.S. The centers can deliver both near shore and offshore services, dependent upon customer location and expectations. iGATE Solutions operates in India, Canada, the U.S., Europe, Singapore, Malaysia, Japan, and Australia.

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iGATE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

AS OF DECEMBER 31, 2007 AND 2006

iGATE Professional Services (“iPS”)

The iPS segment’s service offerings include a variety of client-managed and supervised IT staffing service offerings which include enterprise resource package implementation and integration, application support services and client directed software design and customization.

The iPS segment services North America.

In connection with the divestiture of iPS, iGATE’s historical and future financial results will now reflect the Professional Services business as discontinued operations, effective beginning as of January 1, 2008.

iGATE Shared Services (formerly “iGATE Corporate”)

In 2007, 2006 and 2005, iGATE Shared Services includes the operations of ICRI acquired on February 26, 2003, iGATE Clinical Research International Private Ltd. acquired on October 28, 2003 and corporate and other unallocated costs.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies in Note 1. We evaluate segment performance based upon profit or loss from operations. We do not allocate income taxes, other income or expense and non-recurring charges to segments. In addition, we account for inter-segment sales and transfers at current market prices. All inter-segment sales have been eliminated in consolidation, which are not material.

The following tables present selected financial information for the Company’s reporting segments, as reclassified for discontinued operations, for the years ended December 31, 2007, 2006 and 2005:

	Year Ended December 31, 2007
	iGATE Solutions		iGATE Professional Services		iGATE Shared Services(1)			Total
	(Dollars in thousands)
External revenues	$	198,818	$	106,050	$	2,390		$	307,258
Cost of revenues		133,783		83,253		1,213			218,249
Gross margin		65,035		22,797		1,177			89,009
Selling, general and administrative		45,922		14,833		10,687			71,442
Restructuring charge		—		—		769			769
Goodwill impairment		1,950		—		—			1,950
Income (loss) from operations	$	17,163	$	7,964	$	(10,279	)	$	14,848
Other income, net						6,038			6,038
Minority interest						(2,992	)		(2,992	)
Loss on venture investments and affiliated companies						(193	)		(193	)
Gain on sale of stock of subsidiary						136			136
Equity in income of affiliated companies						29			29
(Loss) income before income taxes					$	(7,261	)	$	17,866

72

iGATE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

AS OF DECEMBER 31, 2007 AND 2006

	Year Ended December 31, 2006
	iGATE Solutions			iGATE Professional Services			iGATE Shared Services(1)			Total
	(Dollars in thousands)
External revenues	$	169,570		$	112,476		$	1,542		$	283,588
Cost of revenues		122,694			86,594			924			210,212
Gross margin		46,876			25,882			618			73,376
Selling, general and administrative		42,587			16,459			10,574			69,620
Restructuring recovery		(2,507	)		(555	)		—			(3,062	)
Income (loss) from operations	$	6,796		$	9,978		$	(9,956	)	$	6,818
Other income, net								3,992			3,992
Minority interest								(752	)		(752	)
Gain on venture investments and affiliated companies								578			578
Equity in income of affiliated companies								317			317
(Loss) income before income taxes							$	(5,821	)	$	10,953
	Year Ended December 31, 2005
	iGATE Solutions			iGATE Professional Services			iGATE Shared Services(1)			Total
	(Dollars in thousands)
External revenues	$	138,032		$	136,775		$	1,185		$	275,992
Cost of revenues		97,108			107,354			648			205,110
Gross margin		40,924			29,421			537			70,882
Selling, general and administrative		38,948			17,173			11,362			67,483
Restructuring recovery		—			(481	)		—			(481	)
Income (loss) from operations	$	1,976		$	12,729		$	(10,825	)	$	3,880
Other expense, net								(275	)		(275	)
Minority interest								(261	)		(261	)
Gain on sale of stock of subsidiary								5,549			5,549
Loss on venture investments and affiliated companies, net								(2,149	)		(2,149	)
Equity in income of affiliated companies								338			338
(Loss) income before income taxes							$	(7,623	)	$	7,082

(1) Shared Services activities includes the operations of iGATE Clinical Research International Inc. and iGATE Clinical Research International Private Ltd., general corporate expenses, interest income and expense, equity in losses of unconsolidated affiliates, minority interest, loss from joint ventures and restructuring charges not identified to a specific segment, and other unallocated charges. The Company evaluates segments based on income (loss) from operations. Since certain administrative and other operating expenses or income sources have not been allocated to the operating business segments, this basis is not necessarily a measure computed in accordance with generally accepted accounting principles and it may not be comparable to other companies.

73

iGATE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

AS OF DECEMBER 31, 2007 AND 2006

Total assets by segment were as follows:

	Year Ended December 31,
	2007		2006		2005
	(Dollars in thousands)
iGATE Solutions	$	158,510	$	106,034	$	95,010
iGATE Professional Services		15,328		20,798		21,368
iGATE Corporate		42,086		63,942		61,096
Total assets	$	215,924	$	190,774	$	177,474

Revenues based on the location of the customer and tangible long-term assets by geographic area consisted of the following:

	Year Ended December 31,
	2007		2006		2005
	(Dollars in thousands)
Revenues:
North America, principally U.S.	$	256,554	$	241,433	$	235,054
Europe		23,834		19,123		19,284
Pacific Rim, principally India		26,870		23,032		21,654
Total revenues	$	307,258	$	283,588	$	275,992
	Year Ended December 31,
	2007		2006		2005
	(Dollars in thousands)
Tangible long-term assets:
North America, principally U.S.	$	1,054	$	1,392	$	1,610
Europe		111		131		176
Pacific Rim, principally India		34,541		28,344		26,753
Total tangible long-term assets	$	35,706	$	29,867	$	28,539

The following is a concentration of revenues greater than 10% for the periods shown:

	2007		2006		2005
General Electric Company
iGATE Solutions	25	%	30	%	35	%
iGATE Consolidated	16	%	18	%	18	%
Royal Bank of Canada
iGATE Solutions	18	%	10	%	—
iGATE Consolidated	12	%	—		—
TEKsystems, Inc.
iGATE Professional Services	12	%	13	%	—
International Business Machine Corp.
iGATE Professional Services	12	%	11	%	22	%
iGATE Consolidated	—		—		11	%
Wachovia Corporation
iGATE Professional Services	—		—		11	%

74

iGATE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

AS OF DECEMBER 31, 2007 AND 2006

17. Quarterly Financial Information (Unaudited)

The following table sets forth certain unaudited financial information for each of the quarters indicated below and, in the opinion of management, contains all adjustments, consisting only of normal recurring adjustments, if necessary, for a fair presentation thereof. Earnings per share amounts for each quarter are required to be computed independently, and therefore may not equal the amount computed for the entire year.

	Three Months Ended
	March 31		June 30			September 30		December 31
	(Dollars in thousands, except per share data)
2007:
Revenues	$	75,281	$	76,213		$	76,146	$	79,618
Gross margin		21,587		21,327			22,096		23,999
Income from operations		4,219		954			5,025		4,650
Income from operations before income taxes		4,879		2,525			5,719		4,743
Net income	$	4,327	$	2,072		$	4,331	$	4,855
Net earnings per common share, basic	$	0.08	$	0.04		$	0.08	$	0.09
Net earnings per common share, diluted	$	0.08	$	0.04		$	0.08	$	0.09
2006:
Revenues	$	67,696	$	69,322		$	71,954	$	74,616
Gross margin		17,182		16,802			18,428		20,964
Income (loss) from operations		300		(377	)		1,173		5,722
Income from operations before income taxes		1,651		212			2,053		7,037
Net income (loss)	$	1,083	$	(406	)	$	1,550	$	6,477
Net earnings (loss) per common share, basic	$	0.02	$	(0.01	)	$	0.03	$	0.12
Net earnings (loss) per common share, diluted	$	0.02	$	(0.01	)	$	0.03	$	0.12

18. Related Party Transactions

The Company has advanced employees $1.4 million and $1.1 million at December 31, 2007 and 2006, respectively. These advances do not exceed $2,500 per employee and are typically deducted from the employee’s salary over a six-month period or until paid in full.

At December 31, 2007, Sunil Wadhwani, CEO and Co-Founder of iGATE Corporation, directly owned 12,738,791 common shares of the Company and indirectly owned 2,562,262 common shares of the Company through various family trusts.

At December 31, 2007, Ashok Trivedi, President and Co-Founder of iGATE Corporation, directly owned 12,961,131 common shares of the Company and indirectly owned 2,339,922 common shares of the Company through various family trusts.

At December 31, 2007, the Company did not have leased space from Sunil Wadhwani, the Company’s Co-Chairman and Chief Executive Officer, and Ashok Trivedi, the Company’s Co-Chairman and President. In 2007, Messrs. Wadhwani and Trivedi sold various properties owned jointly and individually. The total rent paid in 2007, 2006 and 2005 was $0.2 million, $0.5 million and $0.5 million, respectively.

75

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not Applicable.

ITEM 9A. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of Company management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to the Securities Exchange Act of 1934 (“Exchange Act”) Rules 13a-15(b) and 15d-15(b). Based upon, and as of the date of this evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective. The results of management’s assessment were reviewed with the Company’s Audit Committee.

The certification required by Section 302 of the Sarbanes-Oxley Act of 2002 are filed as exhibits 31.01 and 31.02, respectively, to this Annual Report on Form 10-K.

Management’s Report on Internal Control Over Financial Reporting

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The 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 in the U.S.A. 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 ineffective because of changes in conditions or that the degree of compliance with established policies or procedures may deteriorate.

The Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2007. In making its assessment of internal control over financial reporting, management used the criteria described in the Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

Based upon this assessment, management believes that the Company’s internal control over financial reporting was effective as of December 31, 2007.

The Company’s independent registered public accounting firm, BDO Seidman, LLP, has issued its report on the effectiveness of the Company’s internal control over financial reporting.

Changes in Internal Control Over Financial Reporting

There has been no change in iGATE’s internal control over financial reporting that occurred during the fourth quarter that has materially affected, or is reasonably likely to materially affect, such internal control over financial reporting as of December 31, 2007.

76

Report of Independent Registered Public Accounting Firm on

Internal Control over Financial Reporting

Board of Directors and Shareholders

iGATE Corporation

Pittsburgh, PA

We have audited iGATE Corporation’s internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). iGATE Corporation’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 Item 9A, “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, iGATE Corporation maintained, in all material respects, effective internal control over financial reporting as of December 31, 2007, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of iGATE Corporation as of December 31, 2007 and 2006, and the related consolidated statements of operations, stockholders’ equity and comprehensive income (loss), and cash flows for each of the three years in the period ended December 31, 2007 and our report dated March 17, 2008 expressed an unqualified opinion thereon.

/s/ BDO Seidman, LLP

Milwaukee, WI

March 17, 2008

77

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information required by this Item, not set forth below, is incorporated herein by reference from the Company’s definitive proxy statement relating to the Annual Meeting of Shareholders scheduled for July 17, 2008, which will be filed with the Commission within 120 days after the close of the Company’s fiscal year ended December 31, 2007 (the “Proxy Statement”).

We have adopted a code of ethics applicable to all of our employees, including our principal executive officer, principal financial officer and principal accounting officer titled Code of Conduct Policy. The Code of Conduct Policy is posted on the Company’s website, www.igatecorp.com (under the “Corporate Governance” caption of the Investor Relations page). The Company intends to satisfy the disclosure requirement regarding certain amendments to, or waivers from, provisions of its code of ethics by posting such information on the Company’s website.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this Item is incorporated by reference to the Company’s Proxy Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS

The following table provides information as of December 31, 2007 regarding compensation plans and arrangements under which equity securities of iGATE are authorized for issuance.

	Equity Compensation Plan Information
Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)	Weighted-average exercise price of outstanding options, warrants and rights (b)		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
	(in thousands except for price)
Equity compensation plans approved by security holders	4,595	$	3.15	11,127
Total	4,595	$	3.15	11,127

During 2006, the Company adopted the 2006 iGATE Corporation Stock Incentive Plan (the “Plan”). The Plan provides that up to 14.7 million shares of the Company’s Common Stock shall be allocated for issuance to directors, executive management and key personnel.

The other information required by this Item is incorporated by reference to the Company’s Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this Item is incorporated by reference to the Company’s Proxy Statement.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

Information required by this Item is incorporated herein by reference to the section describing “Ratification of Appointment of Independent Registered Public Accounting Firm” in the Company’s Proxy Statement.

78

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) l. Financial Statements

The following Consolidated Financial Statements of the registrant and its subsidiaries are included on pages 40 to 43 and the report of Independent Registered Public Accounting Firm is included on page 39 in this Form 10-K.

Report of Independent Registered Public Accounting Firm.

Consolidated Balance Sheets—December 31, 2007 and 2006.

Consolidated Statements of Operations—Years ended December 31, 2007, 2006 and 2005.

Consolidated Statements of Shareholders’ Equity and Comprehensive Income (Loss)—Years ended December 31, 2007, 2006 and 2005.

Consolidated Statements of Cash Flows—Years ended December 31, 2007, 2006 and 2005.

Notes to Consolidated Financial Statements

2. Consolidated Financial Statement Schedules

The following consolidated financial statement schedules shown below should be read in conjunction with the Consolidated Financial Statements on pages 40 to 43 in this Form 10-K. All other schedules are omitted because they are not applicable or the required information is shown in the Consolidated Financial Statements or notes thereto.

The following items appear immediately following the signature pages:

Financial Statement Schedules:

Schedule II—Valuation and Qualifying Accounts for the three years ended December 31, 2007, 2006 and 2005, respectively.

3. Exhibits

Exhibits required by Item 601 of Regulation S-K are listed in the Exhibit Index, which is incorporated herein by reference.

79

iGATE CORPORATION

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS

FOR THE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005

	Balance at beginning of period		(Credited) charged to expense			Deductions(1)			Balance at end of period
	(in thousands)
Allowance for Doubtful Accounts:
Year ended December 31, 2007	$	1,090	$	(159	)	$	5		$	936
Year ended December 31, 2006		1,776		286			(972	)		1,090
Year ended December 31, 2005		3,892		(949	)		(1,167	)		1,776
Deferred Tax Valuation Allowance:
Year ended December 31, 2007	$	25,045	$	580		$	(1,348	)	$	24,277
Year ended December 31, 2006		23,952		1,462			(369	)		25,045
Year ended December 31, 2005		19,176		5,086			(310	)		23,952

(1) Write-offs, net of recoveries, cash payments related to restructurings and the use of capital loss carry forwards and foreign tax credits.

80

Exhibit	Index Description of Exhibit
3.1	Second Amended and Restated Articles of Incorporation of the Company are incorporated by reference to Exhibit 3.1 to the Quarterly Report on Form 10-Q, File No. 000-21755, filed on August 14, 2000.
3.2	Amended and Restated Bylaws of the Company are incorporated by reference to Exhibit 3.2 to the Quarterly Report on Form 10-Q, File No. 000-21755, filed on August 14, 2000.
4.1	Form of certificate representing the Common Stock of the Company is incorporated by reference from Exhibit 4.1 to iGATE Corporation’s Registration Statement on Form S-1, Commission File No. 333-14169, filed on November 19, 1996.
10.1	Form of Employment Agreement by and between the Company and Sunil Wadhwani and Ashok Trivedi is incorporated by reference from Exhibit 10.1 to iGATE Corporation’s Registration Statement on Form S-1, Commission File No. 333-14169, filed on November 19, 1996.*
10.1(a)	Form of Amendment to Employment Agreement by and between the Company and Sunil Wadhwani and Ashok Trivedi is incorporated by reference from Exhibit 10.1(a) to the Annual Report on Form 10-K, File No. 000-21755 filed on March 28, 2001.*
10.2	Executive Employment Agreement dated November 22, 2000 between Steven Shangold and Emplifi, Inc. and iGATE Corporation is incorporated by reference from Exhibit 10.2 to the Annual Report on Form 10-K, File No. 000-21755 filed on March 28, 2001.*
10.2(a)	Employment Agreement Amendment dated September 30, 2001, between Steven Shangold, Emplifi, Inc. and iGATE Corporation filed on April 1, 2002.*
10.3	Employment Agreement dated April 1, 2001 between iGATE Management, Inc., and Michael J. Zugay is incorporated by reference from Exhibit 10.1 to the Quarterly Report on Form 10-Q, File No 000-21755 filed on August 14, 2001.*
10.3(a)	iGate Corporation 2006 Stock Incentive Plan is incorporated by reference to Exhibit 10.01 to the Quarterly Report on Form 10-Q, File No. 000-21755, filed on August 9, 2007.
10.4	Second Amended and Restated Stock Incentive Plan is incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q, File No. 000-21755, filed on August 14, 2000.*
10.4(a)	Executive Employment Agreement dated August 21, 2003 between Phaneesh Murthy and iGATE Global Solutions, Ltd. filed on November 14, 2003.
10.8(f)	First Amended and Restated Loan Agreement dated September 14, 2006 by and among iGATE Corporation, iGATE, Inc. and PNC Bank, N.A. filed as Exhibit 10.01 to Form 8-K on September 20, 2006.
10.8(g)	First Amendment to First Amended and Restated Loan Agreement dated August 22, 2007 by and among iGATE Corporation, iGATE, Inc. and PNC Bank, N.A. filed as Exhibit 99.1 to Form 8-K on August 28, 2007.
10.9	Lease Agreement dated January 15, 1995 by and between iGS and Messrs. Wadhwani and Trivedi for real estate in Bangalore, India is incorporated by reference to Exhibit 10.10 to iGATE Corporation’s Registration Statement on Form S-1, Commission File No. 333-14169, on April 1, 2002.
10.10	Lease Agreement dated November 6, 1996 by and between iGS and Messrs. Wadhwani and Trivedi for real estate in Bangalore, India is incorporated by reference to Exhibit 10.11 to iGATE Corporation’s Registration Statement on Form S-1, Commission File No. 333-14169, filed on November 19, 1996.
10.11	Lease Agreement dated January 15, 1998 by and between iGS and Messrs. Wadhwani and Trivedi for real estate in Bangalore, India incorporated by reference to Exhibit 10.12 to Annual Report on Form 10-K for the year ended December 31, 1998.

81

Exhibit	Index Description of Exhibit
10.12	Lease Agreement dated March 26, 1997 by and between iGS and Messrs. Wadhwani and Trivedi for real estate in Bangalore, India incorporated by reference to Exhibit 10.13 to Annual Report on Form 10-K for the year ended December 31, 1998.
10.13	Lease Agreement dated January 13, 1998 by and between iGS and Messrs. Wadhwani and Trivedi for real estate in Chennai, India incorporated by reference to Exhibit 10.14 to Annual Report on Form 10-K for the year ended December 31, 1998.
10.14	Lease Agreement dated April 1, 1996 by and between Scott Systems Private Limited and Messrs. Wadhwani and Trivedi for real estate in Bombay, India is incorporated by reference from Exhibit 10.12 to iGATE Corporation’s Registration Statement on Form S-1, Commission File No. 333-4169, filed on November 19, 1996.
10.15	Lease Agreement dated April 1, 1996 by and between Scott Systems Private Limited and Sunil Wadhwani for real estate in Bombay, India is incorporated by reference to Exhibit 10.13 to iGATE Corporation’s Registration Statement on Form S-1, Commission File No. 333-14169, filed on November 19, 1996.
10.16	Lease Agreement dated April 1, 1996 by and between Scott Systems Private Limited and Ashok Trivedi for real estate in Bombay, India is incorporated by reference to Exhibit 10.14 to iGATE Corporation’s Registration Statement on Form S-1, Commission File No. 333-14169, filed on November 19, 1996.
10.17	Lease Agreement dated April 18, 1998 by and between Scott Systems Private Limited and Messrs. Wadhwani and Trivedi for real estate in Mumbai, India incorporated by reference to Exhibit 10.18 to Annual Report on Form 10-K for the year ended December 31, 1998.
10.18	Lease Agreement dated April 18, 1998 by and between Scott Systems Private Limited and Messrs. Wadhwani and Trivedi for real estate in Mumbai, India incorporated by reference to Exhibit 10.19 to Annual Report on Form 10-K for the year ended December 31, 1998.
10.20	Lease Agreement dated October 14, 1998 by and between Park Ridge One Associates and the Company for office space located in Park Ridge Office Center near Pittsburgh, Pennsylvania incorporated by reference to Exhibit 10.20 to Annual Report on Form 10-K for the year ended December 31, 1998.
10.20(a)	First Amendment to Lease Agreement dated October 14, 1998 by and between Park Ridge One Associates and the Company for office space located in Park Ridge Office Center near Pittsburgh filed as Exhibit 10.20(a) to Annual Report on Form 10-K for the year ended December 31, 2005 filed on March 16, 2006.
10.21	Lease Agreement dated June 8, 2000 by and between the Company and Foster Plaza Holding Corporation for office space in Foster Plaza located near Pittsburgh, Pennsylvania is incorporated by reference to Exhibit 10.21 to the Annual Report on Form 10-K, File No. 000-21755 filed on March 28, 2001.
10.23	Shareholders Agreement by and among the Company, Sunil Wadhwani and Ashok Trivedi and the Joinder Agreement by Grantor Retained Annuity Trusts established by Messrs. Wadhwani and Trivedi are incorporated by reference to Exhibit 10.5 to iGATE Capital Corporation’s Registration Statement on From S-1, Commission File No. 333-14169, filed on December 16, 1996.
21.0	Subsidiaries of the Registrant filed as Exhibit 21.0 to the Annual Report on Form 10-K filed on March 17, 2008 is filed herewith.
23.1	Consent of Independent Registered Public Accounting Firm is filed herewith.
31.01	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Chief Executive Officer is filed herewith.

82

Exhibit	Index Description of Exhibit
31.02	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Chief Financial Officer is filed herewith.
32.01	Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Chief Executive Officer is filed herewith.
32.02	Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Chief Financial Officer is filed herewith.

* Management compensatory plan or arrangement

83

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on this 17th day of March, 2008.

	iGATE CORPORATION
March 17, 2008	/s/    SUNIL WADHWANI
	Sunil Wadhwani
	Co-Chairman of the Board of Directors,
	Chief Executive Officer, and Director
	/s/    ASHOK TRIVEDI
	Ashok Trivedi
	Co-Chairman of the Board of Directors,
	President, and Director
	/s/    MICHAEL J. ZUGAY
	Michael J. Zugay
	Senior Vice President
	and Chief Financial Officer
	/s/    PHANEESH MURTHY
	Phaneesh Murthy
	CEO-iGATE Global Solutions and Director
	/s/    J. GORDON GARRETT
	J. Gordon Garrett
	Director and Chairman of the Audit Committee
	/s/    RAMACHANDRAN NATESAN
	Ramachandran Natesan
	CFO-iGATE Global Solutions

84