Too small or too soon? Sonata, Happiest Minds follow Accenture, IBM; start segregating AI business revenue

Mint

2 days ago

Almost two years after Accenture Plc started quantifying business from AI, two small Indian information technology service companies have taken the lead in declaring or projecting revenue from the technology that has upended businesses globally. Analysts are divided over whether such disclosures are relevant or premature.
Sonata Software Ltd, which entered the $1 billion club of local IT companies last year, provided an AI revenue estimate for FY28 that far exceeds levels that Accenture most recently disclosed.
'We expect AI-enabled services to contribute 20% of Sonata's revenue over the next three years, reflecting our strong market traction and focused execution," Samir Dhir, managing director and chief executive officer of Sonata Software, told analysts on 5 August.
Sonata Software ended FY25 with $1.2 billion in revenue, up 15.5%. This translates to $160 million in incremental revenue.
If the company adds a similar amount each year for the next three years, its revenue would touch $1.68 billion by FY28, of which about $330 million would be from AI.
To be sure, the Bengaluru-based company aspires for $1.5 billion in revenue by FY26. An email sent to the company on Tuesday seeking comment on revenue goals was unanswered.
Happiest Minds Ltd, which went public about five years ago, started revealing GenAI revenue in October 2023. It got $1.48 million, or 2.3% of its revenue, from the GenAI business vertical during April-June 2025, according to its Q1 report card. This marked a 12% sequential increase from the new technology.
Bengaluru-based Happiest Minds' revenue jumped 24.2% to $243.6 million last fiscal.
With this, both Sonata and Happiest Minds took a leaf from the books of Accenture, which is the world's largest IT outsourcer, and International Business Machines Corp. (IBM).
Accenture, which started disclosing revenue from GenAI in the third quarter of FY23, got about 1 percent of its quarterly revenue from GenAI back then. Now, its share from GenAI has increased to about 4% of quarterly revenue.
Accenture, IBM
Accenture secured $1.5 billion in new GenAI bookings in the March-May 2025 period, which comprised almost 8% of its overall order bookings of $19.7 billion in the quarter. Its revenue from the new technology was $700 million. The Dublin-based company's revenue totalled $17.7 billion in the quarter, up 6% from the preceding quarter.
Since September 2023, the company has taken its total tally of orders in GenAI to $7.1 billion. Peer IBM was not far behind.
'Our GenAI book of business now stands at over $7.5 billion, inception-to-date," Arvind Krishna, chairman and CEO of IBM, said in the company's earnings statement dated 23 July. IBM's business in the April-March period jumped 16.75% sequentially to $17 billion. Book of business refers to bookings and actual sales.
The global AI market will soar from $189 billion in 2023 to $4.8 trillion by 2033 – a 25-fold increase in just a decade, according to a UN Trade and Development (UNCTAD) report in April 2025. AI could quadruple its share of the global frontier technology market, rising from 7% to 29% and emerge as the dominant force, ahead of the Internet of Things, blockchain and electric vehicles, UNCTAD said.
India's largest IT services companies including Tata Consultancy Services Ltd, Infosys Ltd, HCL Technologies Ltd, Wipro Ltd, and Tech Mahindra Ltd have shied away from giving out AI revenue or projections. Although Mumbai-based TCS reported a GenAI deal pipeline of $900 million in April last year, it stopped doing so subsequently.
At least one analyst said that revealing GenAI figures was a determinant of adoption of the technology by both the IT companies and their clients.
'IT companies first give out the number of employees upskilled, then the count of proof-of-concepts developed, and thereafter, the revenues generated," said Ramkumar Ramamoorthy, a partner at Catalincs, a tech growth advisory firm.
Small contracts
The practice of not stating revenue from GenAI is in contrast with 2015, when large IT outsourcers including TCS, Infosys and Wipro regularly put out revenue figures from digital businesses, then a buzzword for the IT industry and included work related to social, mobile, analytics, cloud, and the Internet of Things.
As of now, each of the top five IT outsourcers states either the number of AI-led engagements they are working on or the number of AI agents that they are developing.
Another analyst noted that smaller IT service companies give out GenAI revenue because their average contract sizes are small and business through the new technology becomes a bigger part of those contracts.
'A significant factor driving this divergence in behavior is that (AI) revenues occur in small-sized contracts and hence get lost in the larger players' huge traditional revenues. For smaller firms, these smaller AI contracts are much more significant as they are matched against much smaller average contract size and smaller base revenue. Hence when they call out their AI revenues it looks much more significant against the total," said Peter Bendor-Samuel, founder of Everest Group, a research firm.
He added that larger tech service companies announce AI revenue only when there is something material.
'Investors are becoming sensitive to AI-washing. They feel it is better to only talk about AI and wait until there is material progress on the AI front before they post these numbers," said Bendor-Samuel.
Ramamoorthy disagreed.
'As the adoption of AI—including GenAI, Agentic AI and Physical AI—becomes pervasive, IT companies will discontinue giving out these numbers as it will become the new way of delivering value to clients," said Ramamoorthy.