Tata Consultancy Services (TCS) announced plans to invest USD 6-7 billion to build 1 Gigawatt (GW) of data center capacity in India over the next five to seven years during its Q2FY26 investor call on October 9. The investment is part of TCS's roadmap to become the “world's largest AI-led technology services company.”

Investment Structure and Timeline

TCS CEO K Krithivasan explained that the company's calculation shows that for every 150 megawatt (MW) of computing power, approximately one billion dollars would be required. The project, which is close to India's overall data center capacity, will be developed in phases with funding structured as a mix of equity and debt. The data center business will operate through a new wholly-owned subsidiary that TCS plans to establish.

According to CFO Samir Seksaria, the data center business will have separate management but will maintain adjacencies and partnerships with TCS. First revenues from this new subsidiary are expected to begin 18 to 24 months after the start of operations.

Data Center Operations and Target Market

The sovereign AI data center will host all data and compute within India, specifically catering to hyperscalers, deep-tech firms, government entities, and Indian enterprises. Krithivasan emphasized that the data centers will be established across India, ensuring that all data and computing are hosted within the country and do not leave Indian shores. Most of the capacity will be “passive data center” infrastructure, as the primary users will be hyperscalers and deep tech firms seeking to train and inference models in Indian interfaces.

A passive data center operates as a standby facility in case customers' primary or active data centers experience failures.

Market Context and Strategic Rationale

Krithivasan noted that India currently has only about 1.2 GW of data center capacity, with demand expected to grow almost tenfold in the next five to six years. The planned rollout is designed to help address unmet compute demand in India. TCS is the second IT company in the sector to announce investment in the data center space, following mid-tier firm Coforge's announcement last quarter.

However, investor reaction to Coforge's data center plans was negative, with shares falling over 9 percent the day after results due to various factors, including increased capital expenditure.

AI Strategy and Organizational Changes

The data center project represents a strategic move to complement TCS's partnerships with hyperscalers and deep-tech companies. COO Aarthi Subramanian stated that the initiative will provide coverage across the entire AI stack, from the infrastructure layer to applications. In August, TCS announced the integration of all existing AI teams and capabilities to create a new AI and Services Transformation unit.

TCS veteran Amit Kapur was appointed to lead this unit globally as Chief AI and Services Transformation Officer, effective September 1, reporting to Aarthi Subramanian, Executive Director, President & Chief Operating Officer. The Mumbai-headquartered firm maintains it has a healthy balance sheet and cash flow to fund these long-term initiatives while continuing to return committed cash flow to investors.

Beyond the data center facility, TCS is also investing in quantum computing and ecosystem partnerships to build India's next-generation compute backbone as part of its broader AI infrastructure ambitions.

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