WHY TCS IS POURING BILLIONS INTO DATA CENTRES

India's largest IT exporter has decided that it must own the physical factories that power AI

- T. Surendar, Jas Bardia & Varun Sood

File photo of N. Chandrasekaran, chairman of Tata Sons (L), and K. Krithivasan, CEO of Tata Consultancy Services. In April, Chandrasekaran asked senior TCS executives to explore the data centre opportunity.

There was no high-decibel government event, or even an investor roadshow. The message was tucked inside K. Krithivasan's prepared remarks, in a recent media release.

India's largest IT services exporter, Tata Consultancy Services (TCS), the company Krithivasan now heads, is preparing for the biggest gamble of its five-decade existence: a massive $6.5 billion investment over six years to forge one gigawatt (GW) of new data centre capacity.

Consider the sheer scale of ambition for a moment: This planned capacity alone is enough to match India's entire current data centre base within six years, and the capital expenditure eclipses the combined value of all TCS acquisitions over the last two decades.

That ambition also underlies a tectonic shift within TCS. For decades, the company exported code and consultancy, intangible services that powered global enterprises but left few physical footprints at home. Now, it is choosing to pour billions into concrete, steel and copper. The country's most profitable IT exporter is turning inward, betting that India's artificial intelligence (AI) revolution would need not just algorithms, but infrastructure.

That shift is particularly striking given the group's own history. Back in 2016, another Tata company, Tata Communications, effectively jettisoned its data centre play, deeming it "non-core." The sister concern sold 74% stake in its data centre business to a Temasek Holdings unit for $634 million. Three of those data centres were in Singapore; the rest across India. By last year, Tata Communications had divested its remaining 26%.