Tata Consultancy Services (TCS) is taking a giant leap into artificial intelligence infrastructure as it will develop an enormous 1-gigawatt AI data centre in India. The $6.5 billion expenditure is a radical departure for the IT titan, getting out of the familiar business of outsourcing to the capital-intense realm of AI compute power.
The news was revealed during the September quarter earnings call by TCS when the CEO, Krithi Krithivasan, presented the timeframe for the ambitious undertaking. The endeavor will take place over the next five to seven years in phases. The subsidiary will be formed as a unitary, wholly owned organization tasked with the execution of this venture.
To put the scale into perspective, TCS’s upcoming center would equal India’s total existing data center capacity. The nation only passed the 1-GW threshold for installed capacity in 2024, highlighting just how big this one project is for the digital infrastructure landscape for India.
TCS Invests $1 Billion Per 150MW to Build End-to-End AI Compute Ecosystem
TCS puts the cost of each 150 megawatt of AI compute power required at around $1 billion investment. The firm will finance this by combining equity and debt funding, getting financial investors aboard to shoulder the burden.
The CFO, Samir Sehgal, revealed that the revenues from the data center for AI data will flow within 18 to 24 months. The data center will fundamentally be a passive data center, serving primarily as a stand-by system that kicks in when active data centres encounter issues, so customers have continuous service.
The pool of customers will be mixed, consisting of pure-play startups from the AI sector and deeptech startups, hyperscalers, and government institutions. TCS emphasized the fact that government agencies will account for “a great extent” of their customer’ list, suggesting promising partnership opportunities from the government sector.
It is much more than growing infrastructure for TCS. The business is positioning itself to offer end-to-end enterprise AI solutions from training large language models all the way to deploying generative workloads for AI and hosting secure India-based clouds for customers around the world.
“That will give us coverage across the entire stack of AI, from infra levels to apps,” said TCS COO Aarthi Subramanian on the call.
The strategy is one piece of an overall plan by the Tata Group to build out an end-to-end vertically integrated digital ecosystem spanning infrastructure, software, and consumer-facing artificial intelligence applications. In readiness, TCS is consolidating all the business’s AI teams and talent into a new unit dedicated to AI and Services Transformation. TCSer Amit Kapur will head up the business, reporting directly to Subramanian, COO.
The site is well-timed with India’s surging data center sector. The country’s data center sector, valued between $4 billion and $8 billion, is projected to grow by 15-20% per annum over the next couple of years.
Data Sovereignty and Digital Growth Fuel India’s Gigawatt Data Center Surge
The future looks bright. ICRA Ltd. foresees Indian data center capacity increasing by over double to nearly 2.5 GW by 2027-28, entailing investments up to ₹90,000 crore ($10 billion). Colliers is even more optimistic, forecasting capacity reaching 3.5-4.5 GW by 2030 with overall investments between $25 billion to $30 billion.
“Today, India has close to 1.2 GW capacity, but the requirement will grow ten times from the next five to six years,” said Krithivasan, underlining the humongous potential on the cards.
The growth is driven by India’s vast pool of internet users, the largest anywhere but China and growing digital penetration from the sectors.
As corporations hasten their work on artificial intelligence, the requirement for strong computing infrastructure continues on an upward trajectory.
The news was well taken by investors. The TCS stock gained 1.09% to ₹3,060.20 on the National Stock Exchange on Thursday, outpacing the benchmark Nifty 50 by a small margin, which closed 0.54% higher at 25,181.80 points.
The data center initiative is an indication of TCS’s optimism about India’s digital future and readiness to make large capital outlays to seize the opportunity in AI. Although the firm refrained from giving the precise location for the centre, the intent to maintain all data as well as all AI compute power within India reflects the intensifying need for data sovereignty and home-based cloud infrastructure for catering to domestic customers as well as global customers.
