How Tally Strikes A Balance Between Enabling AI Adoption And Growth

The ‘killer app’ of the early days of computing, Lotus 1-2-3, withered away in three decades after Microsoft Excel bloomed. It redefined and ruled spreadsheets until free-on-cloud Google Spread came handy. The script is largely the same behind the rise of Google Docs, outwriting mighty Microsoft Word that had struck through WordPerfect. Lightroom too framed its journey from Adobe Photoshop that had overshadowed Barneyscan XP. 

All software programs had to face the hard realities of evolving needs. Tally Solutions, one of India’s most enduring enterprise software companies to launch code-less accounting software for businesses, didn’t yield to newer peers and, instead, synced itself with the changing dynamics to stay relevant.  

As India’s digital economy stays the course to make up nearly a fifth of the GDP by 2030, technology makes deep inroads into businesses across the spectrum. In step with the advancement in tech infrastructure, Tally too upgraded itself from floppy disks to Generative AI (GenAI) for small and medium businesses. 

And today, when India’s enterprise engine roars loudest with over 6.3 Cr MSMEs contributing around 30% to the GDP and over 45% of exports, Tally plays a major carrier to drive AI into the system. 

In fact, the technologically backward MSME sector throws open a huge potential for the accounting software. These small businesses, mostly crowded in rural and suburban India, are yet far from leveraging the progress in AI. Inc42 went deeper to comprehend how an age-old software like Tally is enabling AI integration for MSMEs. 

Small Businesses In The Age Of AI

Small and medium businesses are increasingly prioritising AI adoption as the message from the broader business ecosystem gets clear – AI adoption is no longer optional, it’s essential. But MSMEs continue to face structural barriers.

The 2025 IndiaAI report, published in collaboration with the Global Economic Forum, suggests that lack of awareness and data systems, accessibility to relevant solutions and workforce capabilities have been the biggest hurdles to AI adoption in the MSME sphere, which can be shifted with a clear framework around the adoption.

But, is that the real bottleneck? We delved deeper. 

Our discussion with Tejas Goenka, the MD of Tally Solutions, threw up a very different perspective. “The first thing a 70-year-old auto parts trader asked us when we recently visited his office in Kolkata: Aap AI ke baare mein kya kar rahe ho (What are you doing about AI adoption)?”

For Goenka, this reflected adaptability and forward mindset of India’s MSME sector. “It’s wrong to assume India is behind,” he said. “The real challenge lies not in awareness, rather, in introducing AI at scale while ensuring ease of use and preserving trust.”

Sameer Mathur, who founded Roinet Solution as a fintech firm serving the last-mile consumer section, said that besides awareness, the most significant challenges are financial constraints (high cost of tools and lack of skilled professionals), skill shortages (access to AI talent), poor data quality and readiness, and data privacy and compliance concerns.

And Tally, a name that has become synonymous with accounting software across small and medium businesses in India and abroad, has had some basic AI features in its package since the 1990s and it has decided not to take any aggressive step to integrate AI for every customer from day one.

Although that may not seem to be the best approach in the rapidly evolving GenAI era, Tally Solutions has its own reasons. “MSMEs have their own requirements. We need to build software and technology that even our 70-year-old user finds easy to integrate, or it can work on a three-generation-old PC,” argued Goenka. 

“Besides,” he mentioned, “AI is probabilistic. It just predicts using past data, and that prediction has a tendency to degrade over a period of time. So, if you want to build in a sensitive and business-critical environment like ours, the one thing that you have to promise is trust.”

At a time when the world is buzzing with AI updates almost every day and hyperscalers are homing in on India as a top market, Tally sticks to its slow approach since it believes it aligns with the core need of India’s biggest enterprise ecosystem and will serve them for a long term.

Inside AI Integration Approach 

In today’s age of GenAI and Agentic AI, accounting harps greatly on AI-based solutions. From Zoho to SAP, almost every ERP player is reviewing its platform through the AI lens – embedding predictive models, conversational interfaces, and automation at scale.

Tally’s story is no different, except that its customer base is vastly different from its larger competitors. While most large ERPs cater to digitally mature enterprises, Tally serves 2.7 Mn MSMEs – a segment that demands simplicity, reliability, and ease of use – and aims to take this count to 3.5 Mn in the next two to three years.

As Tally embarked on its AI journey, its flagship product from 2020, TallyPrime, evolved in sync. In the last five years, the company has aggressively improved its product features to keep pace with the changing regulatory norms around GST, tax filing, and so on, as well as the evolving technology landscape.

Though its foundation was built back in the late 1980s with Tally 3.0, it is more pertinent to track TallyPrime’s journey before and after the GenAI age.

Between TallyPrime 1.0 and the latest 6.0, Tally Solutions has updated the software package with advancements to help MSMEs handle accounting and automating several tasks. TallyPrime 4.0, for instance, emphasises WhatsApp integration, customised dashboards, and Excel imports. In version 5.0, Tally digitised GST and API connectivity, enabling direct GST portal integration and multi-lingual capabilities (Arabic and Bangla) for global users.

With TallyPrime 6.0, launched earlier this year, the company is trying to simplify financial operations for MSMEs through connected banking.

Tally has partnered with Axis Bank and Kotak Mahindra Bank to enable viewing live bank balances and real-time transactions. It even supports UPI payments and payment links to streamline collections and improve cash flow.

With smart bank reconciliation, the new version enables timely account finalisation and real-time operational insights. It now has direct linkage with financial institutions for better liquidity management.

Tally claims that its software version 6.0 transforms it into a single-window financial command centre for SMEs, which is saving users 30-50% of operational time and enabling faster, safer, and more connected business operations.

“We believe that if we have to reimagine ERP for the future with AI, we cannot rewrite everything from zero,” said the third-generation entrepreneur sitting at the helm of the Tally family. Goenka explained that Tally’s AI integration is focussed on rethinking two user experiences. First, how businesses interact with their systems, including through phones or conversational interfaces. And, second, how they perform data entry, which can be improved using Agentic workflows.

“Can you tell me my best-selling product? Or, can you tell me my best customer? – such queries are commonplace in an interaction between an urban large-scale enterprise and a chatbot. But, for MSMEs, prompt and trustworthy answers to such queries are game-changers,” added Goenka.

Tally integrated Bharat Connect of NPCI Bharat BillPay Ltd (NBBL) into TallyPrime recently, enabling ERP-to-ERP invoice exchange, automatic recording of supplier invoices, and more.

Yet, a company like Tally Solutions, which has its own database of almost 40 years, its own AI language models, and strong technology insight, needs a cautious approach in rolling out newer features because credibility is the biggest capital in the business with the MSME ecosystem.

The goal isn’t just to build an AI-driven ERP, rather, to ensure that AI serves the needs of every MSME user. “We are introducing these AI upgrades for a small cohort of existing and new customers while building a different revenue model around it,” Goenka shared. 

Monetising AI Integration At Low Risks 

Tally Solutions has two main services for its customers – Silver, a single-user version at a one-time cost of INR 22,500, and Gold, a multi-user version costing INR 63,500. That’s how much the software costs today.

The company has rolled out an optional subscription product, Tally Software Services (TSS), with all its latest AI upgrades and connected services like banking and GST filing. TSS comes at a range of INR 4,500 to INR 13,500 a year.

The MSME market needs a distinct approach to sales mainly because of its inherent price-sensitivity. “Most SMEs want enterprise-level services at consumer-level prices. You can understand how difficult it is to make money in this market,” Goenka said.

Yet, Tally has put up a steady growth in revenue over the years and this is expected to remain on track, aided by its regular upgrades and automation. In FY24, Tally’s operating revenue reached INR 622.9 Cr from INR 558.4 Cr a year back, though its net profit halved to INR 25 Cr from INR 51.1 Cr. 

In FY25, the topline reached INR 710 Cr, fuelled by a rush to buy TSS subscriptions, drifting from a three-year-old pattern, where customer additions fetched the bucks. The company did not divulge its bottomline for the fiscal, but Goenka said that it will close FY26 with about 60% of its revenue coming from existing customer base. He hopes to see the operating revenue growing 30-40% over the next three years. 

Eye On Future Through Tally Lens

Tally traces its roots back to the eighties, when a young nation was grappling with frequent political unrest and wobbly reforms were staggering on escalating economic crises, small-scale industries hit the growth trajectory, fuelled by economic reform measures. 

Around this time, Shyam Sundar Goenka’s bobbin factory went on to build the foundation of Peutronics Financial Accountant by his son Bharat Goenka. Peutronics transformed into Tally Solutions along the way, turning into a familiar name among millions of MSMEs.

It is the same philosophy of being an enabler for MSMEs that steered it to also launch products like TallyCapital and TallyEdge. The company now aims at resolving more real-world challenges through better access to lending and financial services. TallyPrime makes up 99% of its revenue, and this is expected to change with TallyCapital readying for a five-fold expansion over the next 2-3 years.

TallyEducation, which helps learn Tally software at training centres, is also projected to see a 30% growth year-on-year in this timeframe. It’s also growing its global footprint across Africa, Saudi Arabia, and Bangladesh, which is expected to contribute 15% of its revenue in FY26, rising from nearly 12% in the previous fiscal.

For Tally and any other SME tech provider, reliability is a non-negotiable essential with growing importance in the AI era. Business owners and decision-makers keen on using AI look for easy-to-use, ready-made solutions that do not call for deep technical knowledge or heavy investment. 

“The overall sentiment is one of cautious optimism. MSME leaders understand the potential, but they’re waiting for practical, affordable tools that fit naturally into their day-to-day workflows,” pointed out Santosh Agrawal, MD at tech services firm Esconet Technologies. 

Tally is also exploring ways to induce safe AI adoption for its users. “We have our own small models. We have partnerships to integrate other AI models, which we are also trying to do. We are trying local deployments with small language models that can work in edge-based environments without internet connectivity for better security,” Goenka said.

Tally stays at the forefront of enabling the tech shift in MSMEs. In a rapidly accelerating world, the seasoned accounting software provider tries to balance its slow and sustainable approach with regular upgrades and advancements as small businesses make big strides in the world’s fourth-largest and fastest-growing economy. 

[Edited by Kumar Chatterjee]