We have a strong pipeline of more than $50 mn AI-led deals: Chakravarthi

The CFO of Sonata Software talks about the outlook for FY25, deal pipeline, and artificial intelligence (AI) strategy

Mid-sized IT services company Sonata Software expects to grow above industry rates with growth bouncing back in the second half of the current financial year. A strong pipeline of large deals is expected to drive growth for the Bengaluru-based company. Jagannathan Chakravarthi, Chief Financial Officer, Sonata Software, talks about the outlook for FY25, deal pipeline, and artificial intelligence (AI) strategy, in an interview with Ayushman Baruah in Bengaluru. Edited excerpts:

What is Sonata Software's outlook for FY25 and what are the factors driving it?

The industry is expected to witness a 5-6 per cent year-on-year (Y-o-Y) growth in FY25. At Sonata Software, we are confident of beating this guidance handsomely. The first two quarters (H1FY25) could witness softness as a result of macro-economic uncertainties, delay in decision-making due to cautionary spends, time to ramp up new deals in Quant Systems (the company it acquired last year), and the seasonal impact of business in Quant. We remain optimistic about our long-term growth prospects, bouncing back in H2FY25 with sturdy growth and improved margin performance. This growth will be guided by our strong pipeline and a solid book-to-bill ratio along with the complementary strength of Sonata Software’s India business. We remain committed to our investment of 1.5-2 per cent of revenue every quarter towards organisational scale and skillset building in Generative AI (GenAI) and Microsoft Fabric, helping us sustain a competitive edge and industry-leading growth in coming years.

How is the integration of Quant Systems shaping up?
 

Quant is now fully integrated with Sonata Software, yielding significant benefits. This union has expanded our presence in the BFSI (Banking, Financial Services, and Insurance) and HLS (Healthcare and Life Sciences) verticals, driving revenue growth and improving margins across Sonata.

How do you see the deal pipeline?
 

The current pipeline remains robust, with 40 per cent consisting of large deals (multi-year contracts valued at over $5 million). Notably, the pipeline from GenAI and Microsoft Fabric will contribute more than $50 million each.

Which industry verticals will drive growth in the next few quarters?
 

In terms of sectors, Sonata Software’s Hi-Tech and Healthcare Life Sciences verticals will continue to deliver strong growth during FY25. Additionally, the BFSI vertical is expected to rebound, driven by factors such as the anticipated US Fed rate cut and the presidential election.

How are you strengthening your AI strategy and any updates on Harmoni.ai's offering?    
 

As part of our AI strategy, we continue to invest 2 per cent of our revenue in developing use cases and industry and function-specific solutions, delivering value-added service and cost savings to our customers in return. We have a strong pipeline of more than $50 million AI-led deals, with projects being pursued with some of our clients in the Retail, Telecom, Healthcare and Hi-tech verticals.
 

Since its launch in July 2023, we have enhanced Harmoni.AI with features that reinforce its responsible-first AI approach and promote GenAI adoption for sustained benefits. we have built differentiated capabilities, IPs, and partnerships, introducing the 4D framework to assess maturity and guide clients through discovery, design, deployment, and differentiation…Harmoni.AI’s enterprise platform supports the design and deployment of Responsible AI foundations, including data management, hybrid LLM deployment and tuning, and AI-first processes for Finance, HR, Legal, and Marketing. We are committed to upskilling and reskilling our workforce in AI and GenAI. Partnering with educators, we have created specialised courses, aiming for 100 per cent literacy in GenAI by FY25. Currently, 70 per cent of our workforce is Level-1 GenAI certified.

What are your hiring plans for FY25?
 

In the last financial year, we onboarded 650 campus hires and we hope to hire a similar number this year too. We also continue to hire for replacements at the lateral level.