TCS to invest $6-7 billion into building data centers; first revenues 18–24 months after start

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Tata Consultancy Services (TCS) gave a glimpse of its roadmap to become the "world’s largest AI-led technology services company” during its Q2FY26 investor call on October 9, as it announced plans to build 1 Giga Watt (GW) in data center capacity in India.

While addressing analysts on a call, K Krithivasan, Chief Executive Officer, TCS, gave a tally of approximately $6-7 billion to be invested into building 1 GW of data center capacity over the next five to seven years.

“Our calculation, is that for every 150 megawatt (MW) of computing power, we would require about a billion dollars,” Krithivasan said.

He further said the project, which is close to India’s overall Data Centre capacity, will be developed in phases, with funding structured as a mix of equity and debt.

TCS creates a new subsidiary

TCS’ AI infrastructure ambitions will be led by a new wholly-owned subsidiary. The IT major plans to establish “multiple AI and Sovereign Data Centers for providing Infrastructure and technology-enabled Services.”

Samir Seksaria, CFO, TCS, shared that the data center business will have a separate management, but it will have adjacencies and partnerships with TCS.

“It would take about 18 to 24 months for the first revenues to kick in for this new subsidiary,” Seksaria said.

Where will TCS host data?

TCS clarified that the sovereign AI data-centre will host all data and compute within India, catering to hyperscalers, deep-tech firms, government entities, and Indian enterprises. “It’s going to be established in data-centres across India, and all the data and compute will be hosted in India and not leave the shores of the country,” Krithivasan added.

He added that most of this would be “passive data center” capacity as users would mostly be hyperscalers and deep tech firms, who want to train and inference models in Indian interfaces.

A passive data center operates as a standby data center in case the primary or the active data centers of customers falter.

Which IT companies have announced data Centers

India’s largest IT firm is the second in the sector to announce an investment in the data center space, with mid-tier firm Coforge revealing the plan last quarter.

“AI net projects are not just Gen AI-led, they need infrastructure, data foundation remediation, and business and process operations technology,” CEO Sudhir Singh told Moneycontrol in a post-earnings interaction in July.

However, the Street did not take this positively, and Coforge shares tanked over 9 percent a day after the results, as investors reacted to a combination of factors, including a spurt in capital expenditure.

Why is TCS setting up a data center

The company said the move to enter AI infrastructure is a strategic move, complementing its partnerships with hyperscalers and deep-tech companies.

“Currently, India has only about 1.2 GW of data-centre capacity, and demand is expected to grow almost tenfold in the next five to six years,” Krithivasan said.

Adding that the planned rollout would help address unmet compute demand in India.

The Mumbai-headquartered firm maintains that it has a healthy balance sheet and cash flow to fund these long-term initiatives while returning its committed cash flow to investors.

“This will give us coverage across the entire AI stack, from infra layer to apps,” said Aarthi Subramanian, COO, TCS.

The company also said the data-center project is part of its broader ambition to become the world’s largest AI-led technology services company.

Apart from the new facility, the company is investing in quantum computing and ecosystem partnerships to build India’s next-generation compute backbone.

AI business unit within TCS

In August, TCS had announced that it is integrating all its existing teams and capabilities in AI to create a new AI and Services Transformation unit.

TCS veteran Amit Kapur was appointed to lead this unit globally as Chief Al and Services Transformation Officer, effective September 1, and will report to Aarthi Subramanian, Executive Director - President & Chief Operating Officer, TCS.