Tata Communications Eyeing to Team-up with TCS to Invest $6.5 Billion in New Data Centre Capacity

Tata Communications is aiming to tie up with its sister company Tata Consultancy Services Ltd (TCS) as the IT services firm proceeds on a huge $6.5 billion investment to set up 1 gigawatt (GW) of new data centre capacity.

Speaking to Mint on Wednesday, Amur Lakshminarayanan, managing director and chief executive of Tata Communications said, “Tata Communications has major strengths in the data centre to data centre connectivity; we are the market leaders in that. When it comes to TCS, there are several areas where we collaborate, and this (new data centre) will also be one of the areas of collaboration with TCS.”

This move comes at a time when global tech giants are tightening their presence in the country's digital infrastructure space, especially as the use of AI workloads grow and companies demand local data storage.

Similarly, Google announced a $15 billion investment on Tuesday to build AI-focused data centres in the country.

While stating that AI has given a boost to the data centre capacity uptake, Lakshminarayanan said, “We will continue to invest to make sure that the data centres, the edge, are all connected with the lowest possible latency, and the highest resilience and reliable solutions. In India, we saw a growing demand for data centre capacity; we see that in the next five years, data centre capacity will double.”

As per the company’s annual report, Tata Communications also has a 26% stake in STT Global Data Centres India Pvt. Ltd.

In addition to the connectivity solutions, Tata Communications is also investing in AI cloud and agentic AI solutions and is offering graphic processing units (GPUs) as a service to enterprises to help them manage their cloud computing requirements. As a part of the Cloud and security business, Tata Communications saw a 13% year-on-year growth to ₹469 crore in the September quarter.

GPUs are powerful computer chips originally designed to handle graphics and images, such as those in video games. Currently, they’re also used to perform complex calculations for things like AI, machine learning, and big data.

Additionally, the firm is also keen on the GPU-as-a-service business. The Tata Communications CEO said, “Currently, most of the usage (of GPUs) is for training purposes and not so much for inferencing. In the future, inferencing will consume 80% of the GPUs and training will consume 20%.” He further mentioned that the company is using direct liquid cooling technology in their data centre connectivity offerings.

While speaking to Mint, the top executive also explained that the technology is beneficial because it consumes less power and ensures the GPU's uptime and availability are among the highest.

As of now,Tata Communications has bought close to 1,000 GPUs but has yet not seen a meaningful jump in revenue from the business. It is also offering GPUs to companies as a service under the India AI Mission and is also using them internally.

“We will not invest in more GPUs if the current 1,000 GPUs are not utilized," Kabir Shakir, chief financial officer of the company, told analysts in an earnings call to discuss the September quarter earnings on Wednesday.