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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

For the fiscal year ended December 31, 2004

Commission File Number 000-21755

iGATE CORPORATION

(Exact name of registrant as specified in its charter)

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

Securities registered pursuant to Section 12(b) of the Act: None

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

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  ¨    No  x

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 an accelerated filer (as defined in Rule 12b-2 of the Act). Yes  x    No  ¨

The aggregate market value of the voting stock held by non-affiliates of the registrant as of June 30, 2004 (based on the closing price of such stock as reported by NASDAQ on such date) was $84,889,352.

The number of shares of the registrant’s Common Stock, par value $.01 per share, outstanding as of March 31, 2005 was 52,563,797 shares.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s Proxy Statement, prepared for the Annual Meeting of Shareholders scheduled for May 26, 2005 to be filed with the Commission are incorporated by reference into Part III of this report.

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iGATE CORPORATION

2004 FORM 10-K

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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 and the markets in which we operate. Without limiting the foregoing, the words “believes,” “anticipates,” “plans,” “expects” 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, 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 1 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 on Form 10-K, 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 Services for IT and Business Process Outsourcing Services (“BPO”) has emerged as a global trend in numerous countries and industries. Our clients recognize that offshore outsourcing is a very effective way to provide high quality, timely and cost-effective IT and BPO services.

IT Services which we deliver using our offshore centers include software application development and maintenance, implementation and support of enterprise applications, data management and integration, business intelligence and embedded systems development. 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 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 will 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 US/European labor and infrastructure costs.

Business Development

On August 10, 2004, we modified the terms of the acquisition agreement dated as of August 21, 2003 relating to our acquisition of Quintant Inc. (“Initial Quintant Transaction Structure”), and entered into a new agreement with the founders and principal shareholders of Quintant (“Modified Quintant Transaction Structure”). The principal reasons that the Quintant acquisition structure was modified were (a) to have the Quintant co-founders more closely aligned to the stock value of iGS, rather than the Company’s common stock, and (b) to simplify the ownership structure of Quintant whereby Quintant will be owned 100% by iGS, rather than the original ownership structure where Quintant was jointly owned by iGS and iGate.

Under the Initial Quintant Transaction Structure, we granted 2.1 million restricted shares of our common stock to three Quintant Co-Founders and granted 0.5 million stock options with a $0.00 exercise price to a fourth Quintant Co-Founder. Under the terms of the Modified Quintant Transaction Structure, our restricted shares were cancelled and recorded as a reduction of additional paid in capital, and all discounted options previously granted were cancelled with no re-issuance.

As part of the Modified Quintant Transaction Structure, we paid the Quintant Co-Founders $4.0 million in cash in August 2004 and $8.9 million in cash in October 2004. The cash payments made in October 2004 were used by the Quintant Co-Founders to purchase 1,526,211 shares (“iGS new shares”) of newly issued shares of iGate Global Solutions, our majority-owned Indian subsidiary (“iGS”). The iGS new shares were purchased at a discount from the prevailing market value by the Quintant Co-Founders.

Since August 21, 2003, we recognized compensation expense based upon the vesting of the restricted stock and stock options granted. In October 2004, we accelerated our recognition of compensation expense in the amount of $4.8 million, of which $3.1 million is related to the cancellation of the 2.1 million shares of our restricted stock and $1.7 million related to the cancelled $0.00 exercise price stock options. In addition, we recorded compensation expense in the amount of $5.2 million related to the Modified Quintant Transaction Structure cash payments and $0.5 million related to the iGS new shares purchased at a discount. These costs were recorded as part of our iGate Solutions segment.

On August 25, 2004, we issued 455,924 shares of iGate Common Stock to two key employees of Quintant and cancelled 103,222 of stock options issued on August 21, 2003 at $0.00 exercise price. The closing share price of the stock at the date of issuance was $2.92. We recorded compensation expense in the amount of $1.3 million related to the issuance of the shares and $0.3 million related to the cancelled stock options. These costs were recorded as part of our iGate Solutions segment.

In June 2004, we sold our Australia affiliate, iGate Asia Pacific Pty Ltd. (“iGate Australia”). In April 2004, we sold our Scotland based affiliate Direct Resources Pty Ltd. (“DRI”). Cash received from these transactions approximated $9.8 million. As required under accounting rules, these dispositions were presented as discontinued operations, net of applicable statutory taxes. Refer to Note 13 to notes to consolidated financial statements for further discussion.

In 2004 and 2003, we made several acquisitions and alliances. The results of the acquired businesses are included in our 2004 and 2003 reportable segments and consolidated results from the date of acquisition of each company. The following is a brief summary of the acquisitions and alliances that we made in 2004 and 2003. The acquisitions are listed in descending order and by reportable segment, beginning with our most recent acquisition in 2004.

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iGate Corporation

In the fourth quarter of 2004, iGate, through a newly formed subsidiary, iGate Clinical Research International, Inc. (“ICRI”), acquired the remaining 10% it did not own in Pittsburgh Clinical Research Network. iGate owns 100% of ICRI. Pursuant to the transaction, ICRI transferred certain clinical research related study agreements for the remaining ownership whose value was immaterial.

In September 2003, iGate purchased a 95% ownership in DiagnoSearch, Inc. for $1.5 million.

On February 26, 2003, iGate purchased the assets of Pittsburgh Clinical Research Network for $0.4 million.

iGate Solutions

In July 2004, iGS acquired the remaining 8% it did not own in Saint Life Pharmaceutical Research Laboratories Private Limited (“Saint Life”) for approximately $0.2 million.

On June 1, 2004, our majority-owned subsidiary Symphoni Interactive LLC was sold to iGS for proceeds totaling $0.5 million.

In May 2004, we sold the assets of our majority-owned subsidiary of Red Brigade UK Ltd. to iGS for proceeds totaling $0.3 million.

In May 2004, iGS acquired an additional 5% of stock ownership in The Concours Group (“Concours”) for approximately $1.25 million, increasing its ownership to approximately 10%.

In February 2004, iGS acquired 92% of Saint Life for approximately $0.5 million. iGS acquired Saint Life primarily for the land that it owns that is adjacent to the iGS Whitefield Campus in Bangalore, India.

In December 2003, iGS acquired the assets of IdeaSpace Solutions Limited (“IdeaSpace”) for $1.5 million.

In October 2003, iGS entered into an India-based joint venture agreement with Software AG. iGS has a 49% ownership stake in the Company.

In August 2003, iGS and iGate acquired Quintant, Inc. Due to certain provisions of the acquisition agreement, we have accounted for the acquisition as a majority-owned subsidiary since August 2003. The modification of the Quintant transaction structure was previously discussed as part of our Business Development section.

In July 2003, iGS entered into an India-based joint venture agreement with CIBER, Inc. iGS has a 49% ownership stake in the Company.

In May 2003, iGS acquired the contact center and facility management business of IT&T Technology Services Limited (“IT&T”) for $4.5 million in cash.

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 segment profitability is consistent with that used by our management. Please refer to 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.

Effective April 1, 2004, we recast our segments to include the operations of Global Financial Services (“GFS”) as part of the iGate Professional Services (“IPS”) segment. Previously, GFS was included in the iGate

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Solutions segment. All prior periods have been reclassified to reflect the change to our segment reporting. The following discussion also compares our operating segments without the operations of iGate Australia Pty Ltd. and Direct Resources Ltd., which are being treated as discontinued operations. Prior to their sale both entities were part of our IPS operating segment.

The following are brief descriptions of each of our segments.

iGate Solutions

The iGATE Solutions segment’s service offerings include outsourcing of IT and BPO (business process outsourcing) services using an onsite / offshore delivery model. This delivery model helps clients achieve greater cost effectiveness through labor arbitrage.

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 contact center services and transaction processing services. The contact center services are offered to clients across all industries and are not industry specifics. 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, billing & collection—which can be performed for clients across all industries.

iGS also recently started to offer a combination of IT and BPO services through its innovative “Integrated Technology and Operations” (ITOPs) service offering . These services consist in optimizing a client’s process and technology, through the use of iGS’s proprietary tolls and business “accelerators” and finally deliver the process from offshore. Clients are expected to benefit from this innovative business model through more efficient processes and labor arbitrage.

iGate Solutions has ODCs located in Bangalore, Hyderabad, Chennai, Delhi, and Pune, India and Wuxi, China. iGate Solutions has global development centers (“GDCs”) located in Canada and the U.S. 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 publicly-held Indian subsidiary. Our iGate Solutions segment has approximately 3,710 employees.

The majority of our clients in the iGate Solutions segment have headquarters in the U.S. and operations throughout the world. We believe our ODCs and GDCs are strategically located in order to service any client regardless of size, scale or geographic location.

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, which are typically one year in duration. 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 General Electric Company (“GE”) which accounted for 37%, 35% and 33% of its revenues for the years ended December 31, 2004, 2003 and 2002, respectively. iGS is a Global Preferred Partner of GE. Its Global Preferred Partnership status extends through the end of 2006.

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iGate Professional Services (“IPS”)

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, PeopleSoft and Siebel.

To satisfy a large client relationship in Canada, iPS also offers billing pass through services on behalf of this client. This is a unique and single situation whereby iPS acts as a vendor management service provider and collects a small fee for its services. iPS does not expect to offer this service as line of service.

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. Certain contracts are based upon a fixed price with payment based upon deliverables and/or project milestones recorded. 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. and Canada. The segment’s largest customers are International Business Machine Corporation (“IBM”) and Wachovia Bank, which account for approximately 23% and 13% of IPS revenues in 2004. In 2003, IBM accounted for 22% of revenue. Wachovia did not have a significant concentration in 2003 and 2002. IPS has approximately 1,120 employees.

iGate Corporate (“iGate”)

Our iGate Corporate segment includes the operations of jobcurry Systems Private Ltd. (“jobcurry”), ICRI, DiagnoSearch and corporate and other unallocated costs. jobcurry continues to provide recruiting and placement services for iGate and outside customers. ICRI and DiagnoSearch contract with pharmaceutical companies to conduct clinical trials on their behalf. DiagnoSearch performs offshore clinical trials. These entities are excluded from the above segments due largely to their dissimilar service offerings and certain economic characteristics. This segment has approximately 150 employees.

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, loss on venture investments and affiliated companies, gain on sale of stock of subsidiaries and gain on deconsolidation of subsidiaries 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.

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.

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, Indian 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

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provider, global reach, technical expertise, responsiveness to client needs, speed in delivery of IT solutions, quality of service and perceived value. We believe that we compete favorably with our principal competitors with respect to these factors. 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 March 31, 2005 of all of our principal operating subsidiaries and affiliates, including the percentage of our ownership in each of these companies:

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, except for the Quintant acquisition discussed more fully in the Notes.

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

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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. In limited situations, we may retain ownership or obtain a license from our client, which permits us or a third party to market the software for the joint benefit of the client and iGate or for our sole benefit.

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, the United Kingdom, Singapore, Australia, the Philippines, Russia, Ukraine and South Africa. 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 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, 2004, iGate (including its operating subsidiaries) had approximately 4,980 non-unionized employees comprised of approximately 4,405 IT professionals (including subcontractors) and approximately 575 individuals working in sales, recruiting, general and administrative roles. As of December 31, 2004, approximately 24% 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.

RISK FACTORS

Our New Business Strategy is Unproven

We have significantly reorganized our business to reflect our business strategy to increase our focus on 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. 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. The recent difficult economic conditions in many sectors of our business have exacerbated these challenges. In addition, 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. Despite the general economic

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slowdown, 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 continue to 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 could have a material adverse effect on our business, operating results and financial condition. Historically, we have done most 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.

Government Regulation of Offshore Outsourcing

Recently, some organizations have expressed concerns about a perceived association between offshore outsourcing and the loss of jobs in the United States. Within the last 12 months, 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, 2004, approximately 24% 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.

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 2005” 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.

In recent years, approximately 98% 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 year 2004 and 2005 H-1B quotas was not substantial. However, unless Congress substantially increases the annual H-1B quota, the pool of H-1B worked in the U.S. who were charged against previous years’ quotas will decline. Such a development would make H-1B recruiting more difficult. In the long term, the pool of available H-1B workers in the U.S. that are not subject to the annual quota will 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

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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 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, which are typically one year in duration. 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:

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, Pure 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. Changes in the business or regulatory climate of India could 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

In September 2004, we renewed our $25.0 million secured credit facility (“the PNC Facility”) with PNC Bank, N.A (“PNC”) for 365 days. The PNC Facility contains restrictive covenants that require us to meet certain financial criteria on a quarterly basis. 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 obtainment of Tangible Net Worth of at least $88 million. In addition, the PNC Facility requires that we maintain an aggregate of $30 million in cash and cash equivalents at all times during the term of the PNC Facility, of which cash and cash equivalents in the amount of $25 million have been pledged to PNC for the term of the PNC Facility. Due to our inability to file our Form 10-K by March 31, 2005, we violated an Affirmative Covenant under the PNC Facility requiring us to deliver audited financial statements to PNC. PNC has waived the default provision. These restrictions on our cash and cash equivalents may restrict our ability to make investments in new and existing businesses. 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:

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

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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 $9.4 million as of December 31, 2004. 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 $4.0 million as of December 31, 2004. 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.

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 the United States and these industries may affect our business. In the year ended December 31, 2004, approximately 72% of our revenues were derived from the United States. Consequently, if the current economic slowdown in the United States is prolonged, our clients may reduce or postpone their IT spending significantly, which may in turn 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 46%, 38% and 30% of revenues for the years ended December 31, 2004, 2003 and 2002, respectively. In the years ended December 31, 2004, 2003 and 2002, GE accounted for 19%, 22% and 19% of our revenues, respectively. Most of our projects

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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 from a mainframe environment to advanced technologies. As a result, our ability to remain competitive will be dependent on several factors, including our ability to help existing employees maintain or develop mainframe skills and to 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 from legacy systems 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 Sunil Wadhwani and Ashok Trivedi, the Co-Chairman and Chief Executive Officer of iGate Corporation and the Co-Chairman and President of iGate Corporation, respectively. Although Messrs. Wadhwani and Trivedi have 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 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 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

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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:

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.

Failure to achieve and maintain effective internal controls could result in a negative market reaction

We are in the process of documenting and testing our internal control procedures in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act, which requires annual management assessments of the effectiveness of our internal controls over financial reporting and report by our Independent Registered Public Accountants addressing these assessments. During the course of testing, we have identified certain deficiencies relating to ineffective controls over the application and monitoring of cash payments received from customers and issuance of customer credit memos and discounts. These deficiencies or any other failure to maintain the adequacy of our internal controls could impair our ability to provide reliable financial reports or prevent fraud. Such deficiencies could also cause investors to lose confidence in our reported financial information, and could result in a negative market reaction. As a result of these deficiencies, our management believes that a material weakness exists and, therefore, we have disclosed in this Form 10-K that our internal control over financial reporting was not effective as of December 31, 2004. We anticipate that our independent registered public accounting firm will issue an adverse opinion on the operating effectiveness of our internal control over financial reporting as of December 31, 2004. There can be no assurance that additional deficiencies will not be detected as a result of the continuing review.

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Information regarding the principal properties owned and leased by the Company and its subsidiaries as of December 31, 2004 is set forth below:

iGS leases approximately 137,000 square feet (including 133,000 square feet listed above) of office space in the Indian cities of Chennai, Bangalore and Pune from the principal shareholders of iGate. Refer to Note 18 to notes to unconsolidated financial statements for further discussion.

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.

In 2004, we settled our lawsuit with Convergys Information Group (“Convergys”) and Chubb Custom Insurance Group. Under the settlement we agreed to pay $0.4 million to Convergys to settle and dismiss any claims.

We are currently involved in a lawsuit in Australia with Cytel Pty. Ltd. (“Cytel”). Cytel is seeking $3.8 million in damages alleging that certain consultants provided to them were unqualified and incompetent. We have vehemently denied these accusations. This lawsuit is more fully discussed in Note 9 to our consolidated financial statements.

There were no matters submitted to a vote of shareholders during the fourth quarter of 2004.

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PART II

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.

On March 31, 2005, we had 180 registered holders of record of our Common Stock.

We are prohibited from paying dividends under our credit facility with PNC Bank. See Note 7 to our consolidated financial statements.

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

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Overview

iGate Corporation, formerly named iGate Capital Corporation, through its operating subsidiaries, is a worldwide 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. This reorganization was done to enable us to identify and penetrate emerging IT markets quickly and effectively. In addition, this strategy enabled us to expand our existing portfolio of services as well as to create new service offerings. We also acquired majority interests or made strategic investments in a number of companies in the internal related services market sector.

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 and applications maintenance outsourcing.

As discussed in our Business Developments section, we modified the terms of the Quintant acquisition and sold iGate Australia and DRI.

Critical Accounting Policies

The following explains our most critical accounting policies. See Note 1 to the Consolidated Financial Statements set forth on pages 45 to 52 of this Form 10-K for a complete description of our significant accounting policies.

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.

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 before the project starts for a predetermined fee. 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. If our 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, which are typically one year in duration. Revenue on these contracts is ratable and predetermined based upon the negotiated contract.

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Accounts Receivable and Allowance for Uncollectible Accounts

We extend credit to clients based upon management’s assessment of their creditworthiness. Substantially all of our revenues (and the resulting accounts receivable) are from Fortune 500 companies, major systems integrators and U.S. 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.

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

Investments in money market funds are stated at cost, which approximates fair value. Investments in marketable equity securities are accounted for in accordance with Statements of Financial Accounting Standards No. 115, Accounting for Certain Investments in Debt and Equity Securities (“SFAS 115”). We have determined that certain of our investments in marketable equity securities 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 comprehensive loss in the Consolidated Statement of Shareholders’ Equity and Comprehensive Loss. The unrealized gain or loss is the difference between our 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 of the respective investment. Factors that are considered by us 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, 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 our cost basis). During 2002, we incurred impairment losses deemed to be other-than-temporary. These impairments are discussed in Note 4 to the Consolidated Financial Statements.

We account for investments in businesses in which we own between 20% and 50% of equity or otherwise acquire 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 (“APB18”). Investments in which we acquire less than a 20% interest, or in which we do not acquire management influence are accounted for using the cost method of accounting or, if publicly traded, as available-for-sale securities. For investments accounted for using the cost or equity method of accounting, management evaluates information (e.g., budgets,

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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.

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 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 the Consolidated Financial Statements.

Stock Based Compensation

At December 31, 2004, the Company had three stock-based employee compensation plans, which are described more fully in Note 11. SFAS No. 123, Accounting for Stock-Based Compensation (“SFAS 123”), gives companies the option to adopt the fair value method for expense recognition of employee stock options or to continue to account for employee stock options using the intrinsic value method, as outlined under Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (“APB 25”). The Company has elected to continue to apply the intrinsic value method to account for employee stock options and discloses the pro forma effect as if the fair value method had been applied in Note 11. The following table illustrates the effect on net loss per share if the Company had applied the fair value recognition provisions of SFAS 123 to stock-based employee compensation:

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 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

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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.

Results of Operations of Our Operating Segments: iGate Solutions, IPS and iGate Corporate for the Year Ended December 31, 2004 as Compared to the Year Ended December 31, 2003:

Effective April 1, 2004, we recast our segments to include the operations of GFS as part of the IPS segment. Previously, GFS was included in the iGate Solutions segment. All prior periods have been reclassified to reflect the change to our segment reporting. The following discussion also compares our operating segments without the operations of iGate Australia Pty Ltd. and Direct Resources Ltd., which are being treated as discontinued operations. Prior to their sale in 2004 both entities were part of our IPS operating segment.

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iGate Solutions

Revenues for iGate Solutions for the year ended December 31, 2004 were $131.5 million, a decrease of $14.4 million or 9.9%, as compared to $145.9 million for the year ended December 31, 2003. During the year, our customers have moved portions of the work we used to do for them in the U.S. to India, at much lower billing rates, negatively affecting our revenue base. In addition, we have experienced revenue declines in our top ten customer base, have begun to wind down some revenue streams that do not have an offshore focus and have been unable to increase our non-GE revenues as rapidly as we expected. Sales cycles in the offshore outsourcing solutions business may extend to twelve months from the initial sales meeting before a services contract is finalized and a sale is made. Because of this, we cannot accurately forecast what impact our revised marketing approach will have on revenues in the upcoming year.

The gross margin as a percentage of sales (“gross margin percentage”) for iGate Solutions was 29.8% for the year ended December 31, 2004, as compared to 31.0% for the year ended December 31, 2003. The factors contributing to the decline in gross margins were a combination of pricing pressures from customers, higher utilization of subcontracted labor versus salaried consultants, wage increases and project cost overruns related to direct labor on projects.

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 non-consultant salaries and employee benefits, recruiting and training costs, rent, depreciation and amortization, as well as communications and facilities costs. Also included in S,G&A costs are compensation charges incurred as a result of the modification of the Quintant transaction and amortization of acquired intangible assets incurred as a result of acquisitions within iGate Solutions. S,G&A costs for the year ended December 31, 2004 were $55.2 million or 42.0% of revenues, as compared to $47.7 million or 32.7% of revenues for the year ended December 31, 2003. While S,G&A costs increased $7.5 million on a comparative basis, $12.1 million was related to the acceleration of compensation expense related to the modification of the Quintant transaction. Without the accleration of compensation expense, SGA costs would have been $43.1 million, a decrease of $4.6 million for the year ended December 31, 2004. Salary related costs decreased $5.1 million from 2003, through employee attrition and the restructuring and winding down of Red Brigade in the U.K. In addition, travel and other related costs decreased $2.0 million as we continue to migrate our projects and workers permanently offshore decreasing the need for travel. Those savings were offset by increases in depreciation and rent in the amount of $2.5 million related to 2003 iGS acquisitions. Unless we experience significant growth, we expect our costs to approximate 30% of revenues during the upcoming year.

Additional operating items included costs associated with a termination of leased office space in the U.K. in the amount of $4.9 million and during the year ended December 31, 2004, we sold a tract of land in India and realized a gain of $3.6 million.

Operating loss as a percentage of sales (“operating loss percentage”) for the year ended December 31, 2004 was 13.2%, as compared to an operating loss percentage of 2.1% for the year ended December 31, 2003. Our operating loss for the current period was due to lower gross margins and increases in S,G&A costs attributable to accelerated compensation expense related to the modification of the Quintant transaction and continued investments in our offshore infrastructure. We believe we have the necessary cost infrastructure in place to become profitable if revenue grows.

iGate Professional Services (“IPS”)

Revenues for IPS for the year ended December 31, 2004 were $131.2 million, an increase of $38.1 million or 40.9%, as compared to $93.1 million. This includes adjustments recorded in 2004 in the amount of $0.8 million related to adjustments of certain customer accounts receivable balances. These adjustments were due to customer credits and discounts. Overall demand for our staffing services has increased for the period as we continue to see favorable trends in the IT services market.

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Gross margin percentage for IPS was 20.7% for the year ended December 31, 2004, as compared to 24.8% for the year ended December 31, 2003. The contributing factors to the decline in gross margin were a combination of pricing pressures, increases in subcontractor versus salaried consultants and increases in business from the preferred vendor pass-through arrangement in our Canadian staffing operations. Pass through arrangements allow for minimal profit margins on services rendered. As we continue to increase the pass through portion of our business our gross margins will continue to be negatively impacted.

S,G&A costs for the year ended December 31, 2004 were $17.0 million or 13.0% of revenues, as compared to $13.9 million or 14.9% of revenues. We increased our bad debt expense by $2.0 million for certain accounts that we believe will not be collectible. While our S,G&A costs increased in absolute dollars, it has decreased as a percentage of revenues.

Additional operating items included $0.9 million of costs associated with a termination of leased office space in Canada.

Operating income percentage was 7.0% for the years ended December 31, 2004 and 9.9% for the year ended December 31, 2003. Operating income decreased by $0.1 million for the year ended December 31, 2004, due to increases in revenue which were offset by increases in S,G&A costs.

iGate Corporate (“iGate”)

Revenues for iGate for the year ended December 31, 2004 were $1.9 million, an increase of $0.3 million from revenues of $1.6 million for the comparable year ended December 31, 2003. This increase in revenue over the comparable period was due to our acquisition of DiagnoSearch and increases in revenue from jobcurry.

Gross margin percentage was 39.9% for the year ended December 31, 2004, as compared to 42.3% for the year ended December 31, 2003. Our gross margins have remained consistent for comparable periods as revenue increases in jobcurry of $0.4 million have offset decreases in gross margins of DiagnoSearch.

S,G&A costs were $9.8 million for the year ended December 31, 2004, as compared to $11.4 million. Our S,G&A costs decreased due to decreases in accounting and legal costs in 2004. Our costs in 2003 included restructuring costs of $0.1 million.

Other Income (Expense) Components

Interest income for the year ended December 31, 2004 was $0.9 million, a decrease of $1.8 million, as compared to $2.7 million for the year ended December 31, 2003. The decrease was due to decreases in investment yields and uninvested cash.

Interest expense for the year ended December 31, 2004 was $0.1 million and was consistent with interest expense of $0.1 million for the year ended December 31, 2003. Interest expense for both years is related to discounted liabilities for an employment agreement and restructuring costs.

Other income, net for the year ended December 31, 2004 was $0.6 million as compared to other expense, net of $0.9 million for the year ended December 31, 2003. Other income for 2004 consisted of favorable foreign currency translation gains on our intercompany debt and a favorable settlement on escrowed claims related to a prior acquisition. Components of expense for 2003 consisted of foreign currency translation losses of $0.2 million and interest accretion of $0.7 million related to a put option and bonus accrual and miscellaneous expense of $0.1 million.

We recognized a loss on affiliated companies of $0.3 million for the year ended December 31, 2004, as compared to a loss of $0.1 million for the year ended December 31, 2003. These losses were related to our investments in CIBER and Software AG.

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Minority interest expense was $0.7 million for the year ended December 31, 2004 and relates to the income of iGS and the losses incurred by Quintant and DiagnoSearch. Minority interest expense was $0.3 million for the year ended December 31, 2003 and included the income of iGS and the losses of Quintant and DiagnoSearch.

In 2003, we recorded an impairment charge on our investment in Air2Web of $0.3 million and recognized a $0.3 million gain on our sale of Red Hat stock. These gain and losses are included as a component of Loss on Venture Investments and Affiliated Companies in the Consolidated Statement of Operations.

Our income tax provision was $5.1 million at a negative effective rate of 30.4% for the year ended December 31, 2004. The significant items comprising our effective tax rate were valuation allowances recorded against certain deferred tax assets. As a result of the asset sale of Red Brigade, deferred tax assets of approximately $2.9 million from net operating losses generated in prior years will expire and not be utilized. iGS will renew an Indian tax holiday related to its new Whitefield campus. The tax holiday will extend through 2009. Our income tax provision was $2.2 million on a loss from continuing operations of $3.4 million at a negative effective rate of approximately 63% for the year ended December 31, 2003. The significant items comprising our negative effective rate include the additional tax on deemed distributions from iGS as a result of the eJiva transaction.

On a consolidated basis, we incurred a net loss from continuing operations of $22.0 million for the year ended December 31, 2004, as compared to net loss of $5.6 million for the year ended December 31, 2003. Our net loss is primarily due to our increased investment in infrastructure costs of our offshore locations, the restructuring charges related to our UK operations and valuation allowances recorded against deferred tax assets.

For the year ended December 31, 2004, our discontinued operations, which is comprised of our Australian and DRI entities, had after tax income of $3.8 million, as compared with a net loss of $3.4 million for the year ended December 31, 2003. In June 2004, we sold Australia and DRI, recognizing a gain of approximately $3.7 million. The income in 2004 was mainly due to the gain on the sale of Australia which occurred in June 2004. The loss in 2003 was mainly due to goodwill impairments related to Australia.

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Results of Operations of Our Operating Segments: iGate Solutions, IPS and iGate Corporate for the Year Ended December 31, 2003 as Compared to the Year Ended December 31, 2002:

Effective April 1, 2004, we recast our segments to include the operations of GFS as part of the IPS segment. Previously, GFS was included in the iGate Solutions segment. All prior periods have been reclassified to reflect the change to our segment reporting. The following discussion also compares our operating segments without the operations of iGate Australia Pty Ltd. and Direct Resources Ltd., which are being treated as discontinued operations. Prior to their sale in 2004 both entities were part of our IPS operating segment.

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iGate Solutions

Revenues for our iGate Solutions segment for the year ended December 31, 2003 were $145.8 million, an increase of $3.3 million, or 2.3%, as compared to $142.6 million for the year ended December 31, 2002. During the year ended December 31, 2003, the acquisition of AquaRegia, Quintant, IdeaSpace and certain businesses of IT&T by iGS contributed $2.8 million of revenue to the iGate Solutions segment. Without these 2003 acquisitions, revenues for the iGate Solutions segment would have been slightly higher from the prior fiscal year, which is a result of not being able to significantly grow our non-GE revenues and due to the reorganization of our sales and marketing team.

The gross margin percentage for iGate Solutions were 31.0% for the year ended December 31, 2003, as compared to 33.4% for the year ended December 31, 2002. Our acquisitions had a 0.8% favorable impact on iGate Solutions gross margins for the year ended December 31, 2003. We cannot determine what impact iGate Solutions acquisitions will have on gross margins in future periods. The contributing factors that led to the decline in gross margins were a combination of pricing pressures from customers, higher utilization of subcontracted labor versus salaried consultants, increases in wage and bench costs, project cost overruns and the unfavorable impact of blended rate contracts, which contributed approximately 14% of iGate Solutions revenues. Billing rates for blended rate contracts are determined based upon the anticipated utilization of onsite/near shore services (“services provided primarily in North America”) and offshore services (“services provided primarily in India”) for the particular project. Once established, these rates are fixed for purposes of these contracts.

S,G&A expenses include all costs that are not directly associated with our iGate Solutions segments revenue generating consultants. S,G&A expenses included non-consultant salaries and employee benefits, recruiting and training costs, rent, depreciation and amortization, communications, facilities costs, restructuring costs and goodwill impairment. Also included in S,G&A costs are deferred compensation charges incurred as a result of the acquisition of Quintant and amortization of acquired intangible assets incurred as a result of acquisitions within iGate Solutions. S,G&A costs for the iGate Solutions segment for the year ended December 31, 2003 were $47.7 million or 32.7% of revenues, which included $0.5 million of additional restructuring costs. In 2002, iGate Solutions S,G&A costs were $42.9 million or 30.1% of revenues, which included $3.4 million of restructuring costs and $24.3 million of goodwill impairment charges. Our S,G&A costs increased $8.4 million due to our acquisitions of AquaRegia, IT&T, Quintant and IdeaSpace. Deferred compensation expense of $1.5 million and amortization of intangible assets of $0.9 million were incurred as a result of the iGate Solutions acquisitions.

Operating loss for the iGate Solutions segment for the year ended December 31, 2003 was 2.1% as compared to an operating loss percentage of 16.0% for the year ended December 31, 2002. The operating loss percentage in 2003 included $6.2 million for the iGate Solutions acquisitions and without these losses, the iGate solutions segment would have had operating income.

Operating loss in 2002 was mainly attributable to restructuring costs and write-offs of impaired goodwill associated with prior acquisitions.

iGate Professional Services (“IPS”)

Revenues for our IPS segment for the year ended December 31, 2003 were $93.1 million, a decrease of $14.5 million or 13.5% as compared to $107.7 million for the year ended December 31, 2002. Factors contributing to the decrease in revenues for IPS were attributable to continued weakness in IT spending specifically in the U.K., decreases in consultant utilization and declines in overall billable consultant headcount. Because of competitive pricing pressures, billing rates for consultants for comparable years have had a negative impact on revenues.

The gross margin percentage for our IPS segment, including billable expenses, was 24.8% for the year ended December 31, 2003, as compared to 27.8% for the year ended December 31, 2002. The decrease in gross margin percentage in this segment was attributable to a combination of pricing pressures, increases in employee related costs and benefits, as well as increased usage of subcontractor labor. During the year, we have also

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expanded an existing relationship as a preferred vendor in Canada, in which we act as a vendor management provider. Our margins on these engagements are minimal, and due to this, our overall IPS gross margin percentage is impacted.

S,G&A costs for the IPS segment for the year ended December 31, 2003 were $13.9 million or 14.9% of revenues, as compared to $18.9 million, or 17.6% of revenues for the year ended December 31, 2002. Factors contributing to the decline in S,G&A costs were attributable to better management of employee headcount and other operating costs. We incurred goodwill impairment charges of $1.7 million in 2002.

Operating income percentage for the year ended December 31, 2003 was 9.9%, as compared to an operating income percentage of 8.6% for the year ended December 31, 2002. The operating income in 2002 was attributable to better management of S,G&A costs.

iGate Corporate

iGate Corporate reports the results of ICRI, DiagnoSearch and jobcurry. ICRI and DiagnoSearch were acquired in 2003. jobcurry continues to provide recruiting and placement services for iGate Corporate and outside customers. Revenues for the segment for the year ended December 31, 2003 were $1.7 million, an increase of $1.1 million, or 182.1% from revenues of $0.6 million for the year ended December 31, 2002. The increase in revenues on a comparable basis was due to the acquisitions of ICRI and DiagnoSearch, the deconsolidation of itiliti and the closure of MobileHelix, which both occurred in 2002. ICRI and DiagnoSearch contributed $0.9 million to iGate Corporate revenues for 2003.

Due to our 2003 acquisition of ICRI and DiagnoSearch, gross margins were 42.3% for the year ended December 31, 2003 and 5.3% for the year ended December 31, 2002.

iGate Corporate segment S,G&A expenses for the year ended December 31, 2003 were $11.4 million, an increase of $0.7 million from S,G&A costs of $10.7 million for the year ended December 31, 2002. S,G&A costs on a comparative basis increased from year to year due to costs incurred related to our 2003 acquisitions. Restructuring costs incurred were $0.8 million in 2002. Our acquisitions related to Quintant, IT &T, ICRI and DiagnoSearch contributed $1.5 million of additional corporate S,G&A costs.

Other income, net

Other income, net for the year ended December 31, 2003 totaled $1.6 million and consisted of interest income on cash and cash equivalents of $2.7 million, offset by interest expense of $0.1 million, foreign currency translation losses of $0.2 million, interest accretion of $0.7 million related to a put option and bonus accrual and miscellaneous expense of $0.1 million. Our acquisitions contributed an additional $0.2 million of interest income. Other income, net for the year ended December 31, 2002 consisted of interest income on cash and cash equivalents of $3.0 million, foreign currency translation gains of $1.3 million, offset by interest expense of $1.6 million, interest accretion of $1.0 million related to a put option and bonus accrual and miscellaneous expense of $0.2 million.

Minority interest

Minority interest reflects the share of the net income or loss of our majority-owned operating subsidiaries attributable to the minority owners. Minority interest amounted to expense of $0.3 million and $0.4 million for the years ended December 31, 2003 and 2002, respectively. The minority interest expense in 2003 was the minority share of the net income of iGS offset by the net losses of ICRI, Quintant and DiagnoSearch. The minority interest expense in 2002 consisted of the minority share of the net income of iGS.

Gain on deconsolidation of subsidiary

We recorded a gain on deconsolidation of itiliti of $7.1 million for the year ended December 31, 2002 that is more fully discussed in Note 4 to the Consolidated Financial Statements.

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Equity in losses of affiliated companies

In 2003, we recorded a loss of $0.1 million on the investments in Software AG and Ciber. We had no losses in 2002.

Loss on venture investments and affiliated companies

In 2003, we recorded an impairment charge on our investment in Air2Web of $0.3 million and recognized a $0.3 million gain on our sale of Red Hat stock. In 2002, we recognized impairment losses of $7.4 million related to our investments in Speechworks and Air2Web. In 2002, we also sold our shares in Versata, Inc. (“Versata”) stock at a loss $ 0.2 million. These losses are included as a component of Loss on Venture Investments and Affiliated Companies in the Consolidated Statement of Operations.

For the year ended December 31, 2003, our discontinued operations, which is comprised of Australia and DRI, had a net loss of $3.4 million as compared to a net loss of $3.3 million for the year ended December 31, 2002. For each respective year, losses were mainly attributable to goodwill impairments that were related to the original acquisitions of Australia.

Income Tax

Our income tax provision was $2.2 million on a loss of $3.4 million at a negative effective rate of approximately 63% for the year ended December 31, 2003. The significant items comprising our negative effective rate include the additional tax on deemed distributions from iGS as a result of the eJiva transaction. Our income tax benefit for the comparable year in 2002 was $0.3 million at an effective rate of 1.4%. The significant items comprising our effective rate included the write-off of impaired goodwill that is not deductible for tax purposes, non-deductible goodwill amortization and equity losses, which are offset by a tax holiday in India, related to our iGS subsidiary.

Liquidity and Capital Resources

Our working capital decreased $7.4 million from December 31, 2003 to December 31, 2004. Our accounts receivable increased by $14.4 million from December 31, 2003 to $61.3 million, and our days sales outstanding increased to 87 days at December 31, 2004 from 73 days at December 31, 2003.

At December 31, 2004, we had cash and short-term investments of $28.2 million and $35.9 million, respectively, as compared to cash and short-term investments of $36.1 million and $39.6 million, respectively, at December 31, 2003. Short-term investments at December 31, 2004 and 2003 consisted mainly of highly liquid short-term investments. Our focus over the past two years has been liquidity along with the preservation of our principal holdings.

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

Cash from Operations

Cash used by operations was $7.8 million for the year ended December 31, 2004. Factors contributing to our use of cash were net losses of $18.2 million for 2004 and changes in working capital items that included increases to our accounts receivable balances of $14.4 million offset by $6.2 million of decreases to other work capital items. During 2004, we recognized $3.6 million in gains related to the sales of land held in India. Significant noncash items in 2004 totaled $25.0 million and included depreciation and amortization, stock based compensation related to the Quintant deal, bad debt allowance, minority interest equity losses, deferred taxes and asset impairments related to our restructurings of UK and Canada. Cash provided by our discontinued operations totaled $2.8 million for 2004.

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Cash used by operations was $14.1 million for the year ended December 31, 2003. Factors contributing to our use of cash were net losses of $9.0 million for 2003, and changes in working capital items that included increases to our accounts receivable balances of $4.2, decreases to our accrued liabilities due to the payment of a put option, offset by $5.7 million related to decreases in other current assets and increases to account payable. Significant noncash items in 2003 totaled $8.6 million and included depreciation and amortization, deferred compensation related to the Quintant deal, bad debt allowance, minority interest equity losses, deferred taxes and goodwill impairment related to Australia. Cash used by our discontinued operations totaled $4.0 million for 2003.

Cash provided by operations was $28.3 million for the year ended December 31, 2002. Our net loss for the year was $27.5 million. Sources of cash in 2002 included decreases in our accounts receivable balances of $12.6 million and other current assets of $9.4 million offset by decreases in accrued liabilities, restructuring reserves, and accounts payable of $3.3 million. Significant noncash items included a goodwill impairment charge of $26.0 million and losses on joint ventures and affiliated companies of $7.6 million offset by a noncash gain on the deconsolidation of itiliti of $7.1 million. Other significant noncash items totaled $6.4 million and included depreciation and amortization, bad debt allowance, minority interest and deferred taxes. Cash used by our discontinued operations totaled $4.9 million for 2002.

Investing Activities

Cash used by investing activities was $0.9 million in 2004 as compared to uses of cash of $9.9 million and $16.2 million in 2003 and 2002, respectively.

Our capital expenditures were $14.9 million, $6.3 million and $1.4 million in 2004, 2003 and 2002, respectively. Significant portions of capital expenditures in 2004 and 2003 were due to the construction of our Whitefield (“Whitefield”) campus located in India, while 2002 capital expenditures were due to normal business purposes.

We have decreased our short-term investment portfolios by approximately $4.3 million and $13.4 million in 2004 and 2003, respectively, using portions of the proceeds of the sales for the construction of our Whitefield campus. In 2002, we purchased $9.1 million of short-term investments.

During the year ended December 31, 2004, we sold Australia and DRI for cash proceeds of $7.2 million. We also sold a tract of land held in India for $4.8 million. We purchased Saint Life for $0.6 million in cash and invested $1.6 million in our two joint ventures CIBER and Software AG.

During the year ended December 31, 2003, we used $15.4 million in net cash reserves to acquire the following entities (dollars in thousands):

In 2003 and 2002, we paid $1.0 million and $4.9 million, respectively, related to earn-out payments related to previous years’ acquisitions. In 2002, we paid $0.9 million to acquire the remaining 10% of Symphoni.

On October 1, 2003, we paid $9.3 million in cash for a put option, which is from a prior acquisition.

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On October 7, 2003, we sold our entire investment in Red Hat common stock for cash proceeds of $1.4 million. We received the Red Hat stock in conjunction with the PTI transaction, which occurred in February 2001.

In 2003, IGS invested approximately $1.8 million to establish an alliance with Concours, and invested $0.1 million to enter into joint ventures with SAG and CIBER. IGS may be required to continue to fund these two joint ventures in proportion to their pro-rata ownership interest.

Financing Activities

Cash provided by financing activities was $3.0 million in 2004 and $1.0 million in 2003, as compared to a $9.5 million use of cash in 2002. Sources of cash related to stock option exercises of $1.9 million and $1.0 million for 2004 and 2003, respectively. In 2004, we issued 220,873 shares of iGS stock to Concours for proceeds of $1.1 million. In 2002, we paid GE $10.0 million related to the remaining portion of our outstanding convertible promissory note due, which was offset by $0.5 million in proceeds from the exercise of employee stock options.

Restructurings

We restructured our businesses in 2004, 2003, 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: