Tally Solutions to rebuild 40-year-old accounting software for AI era. Will customers embrace the change? MD reveals

Tally Solutions is preparing to scrap and rebuild the core architecture of its 40-year-old accounting software to adapt to the artificial intelligence (AI) era, with Managing Director Tejas Goenka saying the overhaul is essential for the company's survival.

However, even as the company begins integrating AI into its products, it is still uncertain how customers will respond to the technology and how quickly they will adopt AI-powered accounting.

“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,” he said, in an interview with the Economic Times Digital.

Goenka said the proposed overhaul would extend to the software's underlying technology, including its proprietary database, mathematical functions and memory management system.

Tally has carried out five major technology rebuilds in its history to keep pace with changing computing requirements, including the shift from DOS to Windows, the emergence of the internet and the adoption of cloud computing.

“It’s painful. There’s no other answer,” Goenka told The Economic Times Digital when asked about rebuilding the architecture of a legacy software company. “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.”

He said the company had previously chosen to discard its existing code and rebuild the software rather than continue modifying an ageing 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 said businesses must be willing to take significant risks and make difficult decisions to adapt to major technological changes.

“take the leap of faith, else there's no way one would survive,” he said.

Tally still figuring out how customers will use AI

Tally began experimenting with AI through pilot projects and integration efforts around 18 months ago, but the technology remains at an early stage, Goenka said.

“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,” Goenka told The Economic Times Digital.

The company introduced its first AI-powered product, TallyIra, in May. It uses artificial intelligence and optical character recognition (OCR) to extract information from documents and reduce manual data entry for users of its flagship accounting software, TallyPrime.

Its 'Docs by Ira' feature extracts details from supplier invoices and converts them into accounting entries. The tool can also process bank statements, reducing the need for users to enter transaction details manually.

Nabendu Das, chief of engineering and products at Tally Solutions, told The Economic Times Digital that the feature can process invoices regardless of their format.

“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,” Das stated.

TallyIra uses Google's Gemini and China's open-source AI model Qwen to extract information from documents. It also features a conversational AI engine that allows customers to interact with their accounting data.

According to Das, around 20,000-25,000 customers have used the product since its launch, with the platform processing approximately 6-7 million pages of invoices and bank statements.

However, TallyIra is currently available as a separately purchased product rather than a standard feature of TallyPrime. Customers need a licensed version of TallyPrime Release 7.1 or later, along with an active Tally Software Service subscription, to access it.

Can businesses trust AI with their accounts?

The use of AI in accounting also raises questions about the accuracy of financial records, particularly as TallyPrime is used for maintaining accounts, GST filings and other tax-related work.

Das acknowledged that AI systems could make mistakes because their outputs are based on probabilities rather than deterministic processes.

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

To minimise errors, Tally has retained human verification in its AI-powered accounting process. Instead of automatically generating accounting vouchers, the software displays the extracted information to users, who can review the entries and check for potential errors before they are recorded.

“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,” Das said.

Tally MD on employees using AI: ‘The tool is the same’

Goenka said employees who take responsibility for AI-generated work produce different results from those who rely entirely on the technology, even when they use the same tools.

“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.

Will AI change the work of India's bookkeepers?

Greater automation of accounting processes is expected to reshape the daily work of bookkeepers and accountants, especially tasks such as entering invoices, recording transactions and reconciling bank statements.

Goenka said AI was already changing established work practices, adding that the extent of its impact on employees would depend on how they adapt to the technology.

“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.

Despite stepping up its AI investments, Tally has continued to hire. The privately held company has about 1,150 employees, with its workforce growing over the past three years.

Goenka said the company had not decided to reduce its workforce because of AI adoption and was continuing to hire while investing in the technology.

“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.