ET Exclusive: TCS looks to rope in TPG for $2 billion AI data centre JV

Economic Times
Economic Times
15h ago 3 views
Tata Consultancy Services is partnering with TPG to create AI and Sovereign Data Centers, investing $2 billion. This marks a significant shift in TCS's business model.
ET Exclusive: TCS looks to rope in TPG for $2 billion AI data centre JV
A What happened
Tata Consultancy Services (TCS) is set to form a joint venture with private equity firm TPG, investing around $2 billion to create AI and Sovereign Data Centers. This initiative marks a significant shift for TCS, which has historically favored a capex-light growth strategy. TCS will hold a 51% stake in the new venture, HyperVault AI Data Centre Ltd, which aims to build up to 1.2 GW of capacity over the next five to seven years. The project is expected to generate revenue within 18-24 months. This move comes as TCS faces challenges in adapting to AI disruptions, having recently laid off 1% of its workforce. The data center market is projected to grow significantly, with TCS's investment positioning it against major competitors in the sector.
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Key insights

  • 1

    Strategic Shift

    TCS is moving from a capex-light model to a capex-heavy approach.

  • 2

    Market Competition

    TCS will compete with major players like Reliance and Adani in the data center space.

  • 3

    Revenue Timeline

    Expected revenue from the new data centers in 18-24 months.

Takeaways

TCS's joint venture with TPG represents a bold step into the data center market, aiming to capitalize on growing demand while navigating the challenges of a new business model.

Topics

AI & ML Economy