IT services firm Sonata Software has said while the overall pipeline remains healthy, decision-making delays and paused opportunities have impacted revenue conversion in the fourth quarter, chief financial officer Jagannathan CN told FE.
Adding to the pressure are global headwinds, particularly the imposition of tariffs by the US, which are indirectly affecting client IT budgets in specific sectors such as retail and logistics, he said.
He added that while spending hasn’t completely dried up, uncertainty has led to stalled decision-making. “This is a tough situation, decisions are not being taken, new opportunities are not coming in.”
The company’s performance in the March quarter reflects these challenges. Net profit for fell 2.56% year-on-year to Rs 107.53 crore in Q4. Revenue from operations, however, rose 19.4% to Rs 2,617.2 crore.
In the international IT services segment, Sonata posted a full-year revenue of Rs 2,829.7 crore, a 5.6% increase. However, Q4 revenue from the segment declined 4% sequentially to Rs 702.3 crore.
Looking ahead, the company is cautious about issuing forward-looking guidance amid prevailing uncertainty. “We don’t want to give a guidance now. There are uncertainties in the market, we will align to the industry and we want to be one of the top quartile growth company,” said Jagannathan.
While deal tenures have not changed, large deal closures remain slow. “We have quite a lot of large deals in the pipeline, but conversion and then closure of those is taking time,” he said.
Sonata continues to see traction in artificial intelligence (AI) integration, particularly in cost-saving areas. AI components are now a part of almost every deal.
While pricing pressure is being felt due to rising competition in AI, the firm believes it can leverage its agility. “Younger companies like us will be able to leverage and quickly respond to the technology evolvements and this can give us, put us in front of other players,” the CFO said.
Internally, the company is using AI for delivery productivity, though full-scale disruption remains to be seen. “We haven’t reached that stage… it’s not happening now,” Jagannathan said, referring to the possibility of AI replacing coding completely. He acknowledged that deal scopes are changing. “That kind of productivity will come in. There are few areas where we are visibly getting it.”
Sonata is maintaining its hiring momentum, especially in campus recruitment. “Campus I think 650 to 700 people we have done in FY25, and will do similar number in FY26,” Jagannathan said. Hiring will continue for attrition replacement and to maintain the pyramid structure.