IT services firm Sonata Software bets on European market to drive growth

The telecommunications sector, a segment of the Technology, Media, and Telecom (TMT) vertical, contributed 31 per cent to the company's revenue

Mid-sized IT services company Sonata Software is betting big on the European market to drive business growth. Europe contributes about 30 per cent to the company’s total revenues while the US is the largest market and makes for about 60 per cent of the top line.

“We expect significant growth in our European business. In Europe, we are seeing significant growth in our Telco and Manufacturing business,” Anthony Lange, Chief Revenue Officer of Sonata Software, told Business Standard.

Telco, part of the technology, media and telecom (TMT) vertical, contributed 31 per cent to the company’s top line while retail and manufacturing make for 34 per cent of the revenues as of the December quarter.

For the Bengaluru-based IT company, growth is driven by a couple of factors, said Lange. “On one hand, clients are driving revenue through improved experience with generative artificial intelligence (GenAI) through data and application modernisation. On the other hand, we are helping clients do more with less and drive optimisation through modernization, as well,” he said.

As part of its growth strategy, the company has built near-shore delivery centres to stay closer to its customers. “For the US, we have Mexico; for Europe, we have Ireland, Poland, and Egypt; for Asia, we have India as our primary location but also Malaysia,” Lange said.

Sonata’s international or IT services business which generated revenues of Rs 696.8 crore during the December quarter operates in the US, the UK, the Nordics and Northern Europe, Australia, and some parts of India and Southeast Asia.

“In the US, we are expecting significant growth in our healthcare life science business, high tech business and BFS (banking and financial services) business,” Lange said.

The company has a strong deal pipeline, 60 per cent of which comprises large deals, Lange said. It won 13 large deals during the nine months of FY24 while 49 large deals are under pursuit. For Sonata, large deals are those that range between $25-50 million on average while some could be over $100 million.

The company is also investing in emerging technologies like GenAI. Last year, it launched Harmoni.AI, a “responsible-first AI offering” with a range of industry solutions and platforms using GenAI. “Today, GenAI is integrated into all the service offerings we bring to our clients,” said Lange.  

Last year, Sonata made its biggest acquisition of Texas-based Quant Systems for $65 million to strengthen its domain expertise in banking and financial services, healthcare and life sciences, consumer/retail and others. “We are open to other similar types of acquisitions,” Lange said.