Operating income increases 49% on a 27% increase in revenues, with record backlog, up 25% year-over-year, and strong operating cash flows

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Hackensack, NJ – May 5, 2008 – Ness Technologies, Inc. (NASDAQ: NSTC), a global provider of IT services and solutions, today announced financial results for the quarter ended March 31, 2008.

First Quarter 2008 Highlights:

• Revenues were $159.7 million, up 27% year-over-year.
• Operating income was $10.0 million, up 49% year-over-year.
• Net income was $6.9 million, up 21% year-over-year.
• Diluted net earnings per share was $0.18, up 20% compared to $0.15 in the first quarter of 2007.
• Non-GAAP diluted net earnings per share was $0.22, up 29% compared to $0.17 in the first quarter of 2007 ( ).
• Operating cash flows for the quarter were $1.9 million, after payment of the $9.5 million arbitration settlement provided for in the fourth quarter of 2007.
• Backlog as of March 31, 2008 was a record $791 million, up 25% compared to $631 million as of March 31, 2007.
• Headcount declined sequentially to 7,800 as of March 31, 2008, due to the previously announced exit of low-margin, non-strategic staff supplementation businesses in Israel, the U.S. and Asia Pacific. Billable headcount in Ness India increased during the quarter by 200 employees.

“We had a solid first quarter, very much in line with our expectations, as we closed a number of large, strategically important new deals,” said Sachi Gerlitz, president and chief executive officer of Ness Technologies. “Key drivers for the quarter included significantly improved operating margins in our Israeli commercial business as well as record first quarter performance from our European operations, which recorded strong organic growth and very good operating margins. We continued to optimize our business, spinning out or reducing low-margin, non-core staff supplementation business activity in Israel, the U.S. and Asia Pacific. With record backlog and a strong sales pipeline, we remain optimistic about our outlook for the future.”
 
“Overall, we had a great quarter in which we overcame the slowing of the economy and the significant weakening of the U.S. dollar during the first quarter to deliver solid bottom line earnings,” stated Ofer Segev, executive vice president and chief financial officer. “Operating cash flows in the quarter were strong in what is typically our weakest cash flow quarter of the year. We generated $11.4 million of operating cash from business operations, a first quarter record, from which we paid the previously announced $9.5 million arbitration settlement payment that we provided for in the fourth quarter. This performance reaffirms that our focus on cash generation is working. Our balance sheet and liquidity remain strong, and we feel confident about the future.”
 
Guidance
For the full year 2008, Ness reiterates its guidance of diluted net earnings per share in the range of $1.00 to $1.05, and increases its revenue guidance to the range of $660 million to $680 million.
The increase in top line guidance accounts for increased revenues attributable to the weakness of the U.S. dollar and the strength of the Israeli shekel, as the company’s foreign revenues are re-measured into dollars for consolidated reporting.
 
Conference Call Details
Ness Technologies president and chief executive officer, Sachi Gerlitz, and executive vice president and chief financial officer, Ofer Segev, will also conduct a conference call to discuss the first quarter 2008 results. The call, which will be simultaneously webcast, will begin at 8:30 AM Eastern Time / 5:30 AM Pacific Time on Monday, May 5, 2008.
To access the Ness Technologies first quarter 2008 earnings conference call, participants in North America should dial 1-800-399-0427 and international participants should dial +1-706-634-5453. A live audio webcast of the conference call will be available on the investor relations page of the Ness Technologies corporate web site at www.ness.com. Please visit the web site at least 15 minutes early to register for the teleconference webcast and download any necessary audio software. A replay of the call will be available on the web site approximately two hours after the conference call is completed.

(1) See “Use of Non-GAAP Financial Information” below for more information regarding Ness’ use of non-GAAP financial measures.
 
About Ness Technologies
Ness Technologies (NASDAQ: NSTC) is a global provider of end-to-end IT services and solutions designed to help clients improve competitiveness and efficiency. The Ness portfolio of solutions and services consists of software product development, including both offshore and near-shore outsourcing; system integration, application development and consulting; and software distribution. With 7,800 employees, Ness maintains operations in 18 countries, and partners with numerous software and hardware vendors worldwide. For more information about Ness Technologies, visit www.ness.com.
 
Use of Non-GAAP Financial Information
In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, Ness uses various non-GAAP measures of net income and earnings per share, including adjustments from results based on GAAP to exclude non-cash stock-based compensation expenses in accordance with SFAS 123R and amortization of intangible assets, net of taxes. Ness’ management believes the non-GAAP financial information provided in this release is useful to investors’ understanding and assessment of Ness’ on-going core operations and prospects for the future. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. Management uses both GAAP and non-GAAP information in evaluating and operating business internally and as such has determined that it is important to provide this information to investors.
 
Forward Looking Statement
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements often are preceded by words such as “believes,” “expects,” “may,” “anticipates,” “plans,” “intends,” “assumes,” “will” or similar expressions. Forward-looking statements reflect management’s current expectations, as of the date of this press release, and involve certain risks and uncertainties. Ness’ actual results could differ materially from those anticipated in these forward looking statements as a result of various factors. Some of the factors that could cause future results to materially differ from the recent results or those projected in forward-looking statements include the “Risk Factors” described in Ness’ Annual Report of Form 10-K filed with the Securities and Exchange Commission on March 17, 2008. Ness is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements, whether as a result of such changes, new information, subsequent events or otherwise.

Ness Technologies media contact:
David Kanaan
USA: 1-888-244-4919
Intl: + 972-3-540-8188
Email: media.int@ness.com

Ness Technologies investor contact:
Drew Wright
USA: 1-201-488-3262
Email: investor@ness.com