At 40, Tally Solutions is ready to junk its old code for an AI-first future

MD Tejas Goenka says the accounting software maker is rebuilding its core for the sixth time, even as it remains uncertain about how AI will reshape its products and the jobs that depend on them.

Forty years after it began building accounting software, Tally Solutions is preparing to 'junk' its existing core architecture and rebuild it for the artificial intelligence (AI) era, a move that managing director Tejas Goenka believes is necessary for the company's survival.

The overhaul will cover foundational components of its software, including its in-house database, math routines and memory manager. It will mark the sixth time the company has undertaken such a redesign, having previously rebuilt its technology to adapt to shifts such as the transition from DOS to Windows, the internet and cloud computing.

"It's painful. There's no other answer," Goenka told the Economic Times Digital when asked about the process of completely overhauling the architecture of a legacy software firm. "This is a 40-year-old company and the product is there. To say, chop chop, new... requires a lot of conviction and self-belief from the leadership to be able to do it because that's not something which comes very easy."

Goenka said the company had taken similar decisions earlier, choosing to abandon its existing code rather than continuously modify an aging system.

"In the first five instances, we've redesigned from zero. We just take our old code, junk it, and then we redesign. We moved from DOS to Windows. That was a redesign because you moved from command line [interface] to GUI [graphic user interface]. The Internet came, suddenly that required a redesign. Your cloud has come, you require a redesign."

Goenka believes the nature of their business is such that there have been a handful of moments in the last 40 years when the company could ask itself how a product could be redesigned today and rebuilt it from scratch.

He added that companies must be willing to "take the leap of faith, else there's no way one would survive."

An AI strategy still taking shape

As per him, Tally Solutions started working on AI pilots and subsequent integration 18 months ago but they are still at a nascent stage with the technology.

"I don't think that we have a clean answer. And I think that very honestly, both incumbents and startups and new entrants are all thinking about this in the same manner. Someone is going to figure this out. And we certainly hope that it's going to be us," he said.

That uncertainty has not stopped the company from introducing AI into its accounting software ecosystem.

In May, Tally launched TallyIra, its first AI-powered product, which uses AI and optical character recognition (OCR) to fetch information from documents and reduce manual data entry for users of its flagship accounting software, TallyPrime.

TallyIra uses a combination of Google's Gemini and Chinese open-source model Qwen to read supplier invoices and convert the information into accounting entries, through its 'Docs by Ira' feature. It can also process bank statements, reducing the need for manual entries.

"What Docs by Ira does is, irrespective of what format your invoice comes in, it doesn't require a human to feed it in. If you have received a soft copy, just share it with our app and we'll convert it to a Tally voucher," Nabendu Das, chief of engineering and products at Tally Solutions, told The Economic Times Digital.

Das added that the feature allows a customer to speak and engage with its own data through Tally's conversational AI engine.

According to Das, around 20,000-25,000 customers have used TallyIra since its launch and has accessed around6-7 million pages of invoices and statements.

However, TallyIra remains a separately purchased product rather than a built-in feature of TallyPrime. Customers need a licensed version of TallyPrime Release 7.1 or later, along with an active Tally Software Service subscription, to use it.

Despite the early adoption, Goenka remains uncertain about how customers will adopt AI-powered accounting software.

"I still don't know how customers will take to it. But if we don't do it now, it is death. That's the way I personally see it," Goenka said.

What happens when AI gets the numbers wrong?

For a company whose software helps businesses maintain financial records and comply with tax requirements, integrating AI also raises questions about accuracy and accountability.

TallyPrime is used for filing of the Goods and Services Tax (GST), along with other taxes and accounting purposes, dealing with swathes of sensitive information. When asked about the question of accountability that follows AI integration, Das acknowledged the possibilities of errors.

"AI is a probabilistic system. It's a non-deterministic system, so it will not be exactly correct in 100% of the cases," he said.

Tally is addressing the issue by retaining human oversight rather than allowing AI to create accounting entries without user verification.

"One of our key parameters or criteria before you can go to market is a very high accuracy. It will make sure there's a human in the loop. It will not automatically make a voucher. It will read the voucher, it will show it to you, it will tell you that potentially there could be a problem," he said.

What happens to India's bookkeepers?

The move towards automated accounting also raises a more difficult question for the thousands of bookkeepers and accountants who have built their careers around Tally.

For many, entering invoices, recording transactions and reconciling bank statements form a substantial part of their daily work. TallyIra is designed to automate some of those activities, potentially changing the skills businesses require from accounting staff.

Goenka acknowledged the disruption but said he did not have a definitive answer about how it would affect individual workers or how they would need to retrain.

"The fact that there is a disruption, there is no denying. I think in the last two years, two and a half years, we've all seen it. How the disruption plays out for specific individuals also depends on that individual," he said.

Within Tally itself, the company has continued to expand its workforce despite increasing investments in AI.

The privately held company employs about 1,150 people and has grown its headcount over the past three years. Goenka said Tally's ownership structure also gives it greater flexibility to experiment with AI.

"We are one of those rare companies that is continuing to hire. We have not taken a call to reduce it. Our bill for AI is fairly large. We keep trying out new things around AI," he said.

As per Goenka, the company has seen a clear difference in performance between employees who use AI and those who reject it. Even among employees who use AI, he said, some use it well and others do not, and the difference lies in whether a person takes responsibility for the work or leaves it to the tool.

"The tool is the same. There is no difference in the tool. The fact that an individual is not delegating responsibility versus a person is delegating responsibility is where the difference starts to come. And you can see it in the output. When someone sends me an email that is AI-generated, I know about it. Whether you applied yourself in generating that email is where the question lies," he said.