AI to outperform 13 years of our cloud revenue this year, says NxtGen CEO Rajgopal

AS Rajgopal, CEO, Nxtgen Datacenter & Cloud Technologies.

Sovereign cloud provider and data centre company NxtGen Cloud Technologies expects its artificial intelligence (AI) business to overtake revenues from its 13-year-old cloud services within the next year, as demand for AI infrastructure sees a sharp uptick across sectors.

"In all probability, AI will beat our traditional cloud business next year," the company’s founder and CEO, AS Rajgopal, said in an interview with Moneycontrol. "It took us 13 years to build our cloud business. AI could surpass that in just one."

NxtGen Cloud generated a revenue of over Rs 230 crore for the fiscal year ending March 31, 2024, up over 16 percent year-on-year, according to the most recent data available with market data platform Tracxn.

The Bengaluru-based firm is a GPU provider under the IndiaAI Mission, the government's flagship initiative to build sovereign AI foundational models. NextGen is the sole provider of NVIDIA’s advanced H200 Tensor Core GPUs in the mission.

"Every rupee I have is used for buying a GPU," Rajgopal further said. "I don’t have an SIP or a fixed deposit, I have GPUs."

According to the company, AI revenue already constitutes a significant share of new business, and the growth trajectory is expected to accelerate in the coming quarters.

Infra Bottleneck, Funding Push

Despite the spike in AI interest, India’s physical infrastructure remains a bottleneck.

The CEO estimates that India currently has only 30,000-40,000 GPUs, whereas the immediate requirement is at least 2 lakh, just to support basic consumer-level AI usage. Enterprise adoption, he added, will require infrastructure that is 50 times more efficient.

To address this challenge, at least in part, NxtGen Cloud Technologies argues that Venture Capital and other investment firms must invest $2-3 billion (approximately Rs 16,000-Rs 24,000 crore) over the next three years to expand data centre capacity.

Also, read: Application-layer AI now accounts for 3X more VC deals than infra in India, says Lightspeed

This is because, going forward,  the focus will be on AI workloads, fractional GPU support, and edge computing.

Sovereign AI

NxtGen, which counts the Election Commission, Ministry of Health, and Airports Authority of India among its sovereign cloud clients, is also seeing interest from banks, insurers, and manufacturers looking to deploy AI within India’s regulatory framework.

"AI will move towards sovereign infrastructure even faster than cloud did," Rajgopal said.

Sovereign cloud AI and cloud have another advantage: reduced compute costs.

Recently, another homegrown data centre and cloud services provider, Yotta, said India is now one of the cheapest places in the world to run AI workloads, with compute costs slashed to nearly one-fifth of global rates.

The company said that thanks to a combination of cutting-edge infrastructure, GPUs that typically cost $10-$12 per hour on hyperscalers are now available in India for under $2 per hour.

Also, read: India offers compute at one-fifth global prices for AI, says Yotta