Mumbai, India – Tata Consultancy Services (TCS) has partnered with global alternative asset manager TPG to invest over $2 billion in a new venture called HyperVault AI Data Centre Ltd. This joint effort aims to build large-scale, artificial intelligence (AI)-ready data centers across India. The announcement marks a significant move for TCS as it targets leadership in AI-driven technology services.
The partnership will see both companies commit up to Rs 18,000 crore, which is just over $2 billion at current exchange rates, in equity over the next few years. TPG will contribute up to Rs 8,820 crore, approximately $1 billion, to the project. TCS will hold a 51% majority stake in the joint venture, while TPG's shareholding in HyperVault is expected to be between 27.5% and 49%. The funding for HyperVault will come from a mix of equity from both partners and additional debt financing, with plans to raise another $4.5 billion to $5 billion through debt.
Building AI-Ready Infrastructure
This substantial investment will support HyperVault's goal to create gigawatt-scale AI-ready infrastructure. TCS plans to develop AI-ready data centers with a total capacity exceeding one gigawatt over the coming years, potentially reaching up to 1.2 gigawatts within five to seven years. These new data centers will address the rapidly growing demand for AI infrastructure from major cloud providers, AI companies, private businesses, and government organizations.
N. Chandrasekaran, Chairman of TCS, expressed enthusiasm for the collaboration. He stated that TPG joining the effort will help build large-scale AI data centers in India, meeting the increasing AI demand. He also noted that this move strengthens TCS's partnerships with hyperscalers and AI companies. Chandrasekaran believes this capability positions TCS uniquely to deliver complete AI solutions to its customers and partners.
Strategic Shift and Market Opportunity
The formation of HyperVault represents a strategic shift for TCS, which has historically favored an asset-light business model. The company is now making a significant capital investment to become a leading player in the data center market. This move aligns with TCS's stated ambition to become the largest AI-led technology services company globally.
K Krithivasan, CEO of TCS, highlighted the importance of entering the data center business. He explained that it is key to deepening partnerships and expanding the scope of offerings for customers. The data centers will be purpose-built, featuring liquid-cooling technology, high rack densities, energy efficiency, and robust network connectivity across key cloud regions.
India's data center market is experiencing rapid growth. Current capacity stands at approximately 1.5 gigawatts but is projected to exceed 10 gigawatts by 2030. Industry estimates show that nearly $94 billion has been invested in India's data center sector since 2019. Jim Coulter, Executive Chairman of TPG, called India the "most undervalued data-center opportunity globally." He pointed to advantages such as a shortage of data center capacity, a national grid offering lower-cost electricity compared to the US, and strong human capital.
Future Impact and Operations
HyperVault will provide secure, reliable, and large-scale AI-ready infrastructure. It will offer customers options to set up active or passive data centers, create private clouds, or use a model-as-a-service approach. TCS will work closely with hyperscalers and AI companies to design, deploy, and optimize AI infrastructure, ensuring world-class service delivery for AI services.
The new business unit expects to start generating revenue within 18 to 24 months. The investment by TPG is being facilitated through TPG Rise Climate and its Global South Initiative, a private equity strategy launched in partnership with ALTÉRRA, along with TPG's Asia Real Estate business. This partnership is TPG's third collaboration with the Tata Group, following previous investments in Tata Motors' electric vehicle business and Tata Technologies.
The expansion of AI data centers is critical for India, which generates nearly 20% of the world's data but has only about 3% of global data center capacity. This project aims to bridge that gap and support India's digital transformation journey.
