Tata Consultancy Services (TCS) is joining forces with global alternative asset management firm TPG to invest up to ₹18,000 crore in its HyperVault AI Data Centre unit. This strategic partnership aims to boost TCS's AI data center business and establish the company as a major player in the rapidly expanding AI and data center landscape.
The collaboration will focus on building AI-ready data centers with a capacity exceeding 1 GW over the next few years. This initiative aligns with TCS's broader objective of becoming the world's largest AI-led technology services firm. The company anticipates that the data center business will begin generating revenue within the next 18 to 24 months.
HyperVault AI Data Centre Ltd, incorporated as a wholly-owned subsidiary of TCS in late October, will serve as the vehicle for this joint venture. TCS will hold a 51% majority stake in the joint venture. TPG's investment, facilitated through TPG Rise Climate and its Global South Initiative in partnership with ALTÉRRA, could give them a final shareholding between 27.5% and 49% in HyperVault. In addition to the equity investments from TCS and TPG, the project will be funded through debt. It's projected that an additional ₹4.5-₹5 billion will be raised through debt over time to support the project's multi-phase rollout.
This partnership signifies a strategic shift for TCS, which has historically pursued a capital expenditure-light, organic growth business model. By taking on external equity from a private equity firm and leveraging large-scale debt, TCS is demonstrating its commitment to the expanding data center market and the growing demand for AI infrastructure.
The HyperVault unit will function as a co-location data center provider, offering services to hyperscalers, Indian enterprises, government entities, and Tata Group companies. These data centers will be purpose-built and liquid-cooled, with a focus on collaborating with hyperscalers and AI companies. The company estimates that every 150 MW of capacity will require approximately $1 billion of investment, implying a total project investment of over $6.5 billion.
N. Chandrasekaran, Chairman of TCS, expressed his enthusiasm for the partnership, stating, "I am delighted to have TPG join us in our journey to build large GW-scale AI data centers in India, tapping the rapidly growing AI demand. It will further strengthen our partnership with hyperscalers and AI companies. With this capability, TCS is uniquely positioned to deliver complete AI solutions".
This move aligns with India's rapid data center expansion, which is forecasted to reach 9 GW of capacity by 2030. The TCS-TPG collaboration underscores the increasing demand for digital infrastructure in India and positions TCS to play a key role in advancing AI and data center capabilities across various sectors.
