John H. Christy III, editor of Forbes International Investment Report, says a small outsourcing firm is in good financial shape and sells very cheaply.

In the wake of the recent global panic, a large number of stocks—in the US and overseas—are now trading at extremely low valuations, but also unprecedented lows in absolute dollar terms.

In a sense, these have effectively been behaving more like extremely long-dated options

iGate (Nasdaq: IGTE) has an absurdly low valuation and lots of upside. Option-like stocks, like options themselves, are not for the faint of heart. So, never play around with money you can’t afford to lose. But for aggressive investors with strong stomachs—and long time horizons—companies like IGTE may be worth a closer look.

The global outsourcing business is dominated by a handful of names that are well known to investors, [such as] India’s Infosys (Nasdaq: INFY) and Wipro (NYSE: WIT).  But beneath these industry giants, there is a vast swath of second-tier outsourcing firms.

One example is iGate. [It] is headquartered in Fremont, Calif., but substantially all of its operations are in India. With a market capitalization of just $184 million and revenue of $219 million, iGate flies under the radar of most institutional investors.

[But] the company, which has been publicly traded since 1996, was originally based in Pittsburgh and known as Mastech. Today, iGate’s largest customer is General Electric (NYSE: GE), which accounts for 20% of revenue. iGate’s roster of blue-chip corporate customers also includes Philip Morris, IBM and Hewlett-Packard. In India, iGate has collected numerous employee satisfaction awards. That’s an important intangible asset in an industry where unusually high levels of staff turnover are the norm.

iGate’s real attraction, however, is valuation. As of December 31st, iGate had $66 million in cash and equivalents on its balance sheet against total liabilities of $43.8 million. [So,] iGate could write a check for every penny it owes to anyone and still have $22 million left over, along with all of its receivables, property, and intangible assets. The company has tangible book value per share of $2.00, of which about half is cold hard cash.

Earnings are another story. The company earned 53 cents per ADR in 2008, but analyst forecasts call for earnings of 49 cents in 2010. On January 21st, iGate announced its first ever  annual dividend of 11 cents per share, a strong sign that management is confident about the company’s prospects.

And they have a lot at stake. iGate chairman Sunil Wadhwani and co-chairman and president Ashok Trivedi have 15.3 million shares each. All told, the directors and officers of the company own nearly 60% of the stock.

The global economic crisis has left an ugly mark on outsourcing. But at seven times earnings, 1.5x book, and 0.84x sales, iGate is trading as if the outsourcing business will never recover. But eventually it will. Meanwhile, you can collect a 3.2% yield while you wait. (The stock closed below $3.50 Monday—Editor.)