diff --git a/app/javascript/dashboard/components-next/Companies/CompaniesHeader/components/CompanySortMenu.vue b/app/javascript/dashboard/components-next/Companies/CompaniesHeader/components/CompanySortMenu.vue
index 768123b9f..8cf75d555 100644
--- a/app/javascript/dashboard/components-next/Companies/CompaniesHeader/components/CompanySortMenu.vue
+++ b/app/javascript/dashboard/components-next/Companies/CompaniesHeader/components/CompanySortMenu.vue
@@ -35,6 +35,10 @@ const sortMenus = [
     label: t('COMPANIES.SORT_BY.OPTIONS.CREATED_AT'),
     value: 'created_at',
   },
+  {
+    label: t('COMPANIES.SORT_BY.OPTIONS.CONTACTS_COUNT'),
+    value: 'contacts_count',
+  },
 ];
 
 const orderingMenus = [
diff --git a/app/javascript/dashboard/i18n/locale/en/companies.json b/app/javascript/dashboard/i18n/locale/en/companies.json
index 86190831b..0d64a4abd 100644
--- a/app/javascript/dashboard/i18n/locale/en/companies.json
+++ b/app/javascript/dashboard/i18n/locale/en/companies.json
@@ -6,7 +6,8 @@
       "OPTIONS": {
         "NAME": "Name",
         "DOMAIN": "Domain",
-        "CREATED_AT": "Created at"
+        "CREATED_AT": "Created at",
+        "CONTACTS_COUNT": "Contacts count"
       }
     },
     "ORDER": {
diff --git a/app/javascript/dashboard/routes/dashboard/companies/pages/CompaniesIndex.vue b/app/javascript/dashboard/routes/dashboard/companies/pages/CompaniesIndex.vue
index cab05b8f4..236de594a 100644
--- a/app/javascript/dashboard/routes/dashboard/companies/pages/CompaniesIndex.vue
+++ b/app/javascript/dashboard/routes/dashboard/companies/pages/CompaniesIndex.vue
@@ -9,7 +9,7 @@ import { useCompaniesStore } from 'dashboard/stores/companies';
 import CompaniesListLayout from 'dashboard/components-next/Companies/CompaniesListLayout.vue';
 import CompaniesCard from 'dashboard/components-next/Companies/CompaniesCard/CompaniesCard.vue';
 
-const DEFAULT_SORT_FIELD = 'created_at';
+const DEFAULT_SORT_FIELD = 'name';
 const DEBOUNCE_DELAY = 300;
 
 const companiesStore = useCompaniesStore();
@@ -37,7 +37,7 @@ const parseSortSettings = (sortString = '') => {
   };
 };
 
-const { companies_sort_by: companySortBy = `-${DEFAULT_SORT_FIELD}` } =
+const { companies_sort_by: companySortBy = DEFAULT_SORT_FIELD } =
   uiSettings.value ?? {};
 const { sort: initialSort, order: initialOrder } =
   parseSortSettings(companySortBy);
diff --git a/enterprise/app/controllers/api/v1/accounts/companies_controller.rb b/enterprise/app/controllers/api/v1/accounts/companies_controller.rb
index 86216b03c..3ec547cda 100644
--- a/enterprise/app/controllers/api/v1/accounts/companies_controller.rb
+++ b/enterprise/app/controllers/api/v1/accounts/companies_controller.rb
@@ -3,6 +3,7 @@ class Api::V1::Accounts::CompaniesController < Api::V1::Accounts::EnterpriseAcco
   sort_on :name, type: :string
   sort_on :domain, type: :string
   sort_on :created_at, type: :datetime
+  sort_on :contacts_count, internal_name: :order_on_contacts_count, type: :scope, scope_params: [:direction]
 
   RESULTS_PER_PAGE = 25
 
diff --git a/enterprise/app/models/company.rb b/enterprise/app/models/company.rb
index 9fa18b8ad..d96344f9b 100644
--- a/enterprise/app/models/company.rb
+++ b/enterprise/app/models/company.rb
@@ -35,4 +35,11 @@ class Company < ApplicationRecord
   scope :search_by_name_or_domain, lambda { |query|
     where('name ILIKE :search OR domain ILIKE :search', search: "%#{query.strip}%")
   }
+  scope :order_on_contacts_count, lambda { |direction|
+    order(
+      Arel::Nodes::SqlLiteral.new(
+        sanitize_sql_for_order("\"companies\".\"contacts_count\" #{direction} NULLS LAST")
+      )
+    )
+  }
 end
diff --git a/spec/enterprise/controllers/api/v1/accounts/companies_controller_spec.rb b/spec/enterprise/controllers/api/v1/accounts/companies_controller_spec.rb
index f5d82310a..3dadcec43 100644
--- a/spec/enterprise/controllers/api/v1/accounts/companies_controller_spec.rb
+++ b/spec/enterprise/controllers/api/v1/accounts/companies_controller_spec.rb
@@ -81,6 +81,46 @@ RSpec.describe 'Companies API', type: :request do
         expect(response_body['payload'].size).to eq(3)
         expect(response_body['payload'].map { |c| c['name'] }).not_to include('Other Account Company')
       end
+
+      it 'sorts companies by contacts_count in ascending order' do
+        company_with_5 = create(:company, name: 'Company with 5', account: account)
+        company_with_2 = create(:company, name: 'Company with 2', account: account)
+        company_with_10 = create(:company, name: 'Company with 10', account: account)
+        create_list(:contact, 5, company: company_with_5, account: account)
+        create_list(:contact, 2, company: company_with_2, account: account)
+        create_list(:contact, 10, company: company_with_10, account: account)
+
+        get "/api/v1/accounts/#{account.id}/companies",
+            params: { sort: 'contacts_count' },
+            headers: admin.create_new_auth_token,
+            as: :json
+        expect(response).to have_http_status(:success)
+        response_body = response.parsed_body
+        company_ids = response_body['payload'].map { |c| c['id'] }
+
+        expect(company_ids.index(company_with_2.id)).to be < company_ids.index(company_with_5.id)
+        expect(company_ids.index(company_with_5.id)).to be < company_ids.index(company_with_10.id)
+      end
+
+      it 'sorts companies by contacts_count in descending order' do
+        company_with_5 = create(:company, name: 'Company with 5', account: account)
+        company_with_2 = create(:company, name: 'Company with 2', account: account)
+        company_with_10 = create(:company, name: 'Company with 10', account: account)
+        create_list(:contact, 5, company: company_with_5, account: account)
+        create_list(:contact, 2, company: company_with_2, account: account)
+        create_list(:contact, 10, company: company_with_10, account: account)
+
+        get "/api/v1/accounts/#{account.id}/companies",
+            params: { sort: '-contacts_count' },
+            headers: admin.create_new_auth_token,
+            as: :json
+        expect(response).to have_http_status(:success)
+        response_body = response.parsed_body
+        company_ids = response_body['payload'].map { |c| c['id'] }
+
+        expect(company_ids.index(company_with_10.id)).to be < company_ids.index(company_with_5.id)
+        expect(company_ids.index(company_with_5.id)).to be < company_ids.index(company_with_2.id)
+      end
     end
   end