Effects of alloying on the electronic and magnetic properties of MnxCoy (x + y=n=2-5; x=0-n) and Mn2Co11 nanoalloy clusters are investigated using the density functional theory (DFT). Unlike the bulk alloy, the Co-rich clusters are found to be ferromagnetic and the magnetic moment increases with Mn-concentration, and is larger than the moment of pure Con clusters of same size. For a particular sized cluster the magnetic moment increases by 2 µB/Mn-substitution, which is found to be independent of the size and composition. All these results are in good agreement with recent Stern-Gerlach (SG) experiments [Phys. Rev. B 75, 014401 (2007) and Phys. Rev. Lett. 98, 113401 (2007)]. Likewise in bulk MnxCo1−x alloy, the local Co-moment decreases with increasing Mn-concentration.