HCLTech enters full-stack AI data centre business with ₹3,500-crore investment

Noida-headquartered HCL Technologies is making a foray into the sovereign AI data centre space with a planned initial investment of ₹3,500 crore. Close on the heels of peer Tata Consultancy Services' planned 1 GW data centre, HCLTech is looking to set up a 50 MW full-stack AI data centre. The proposed investment will be made through a new subsidiary and step-down subsidiaries to be established for this business. Speaking at the company's Q1 FY27 post-earnings press conference, C Vijayakumar, CEO and managing director of HCLTech, said the move into the new business is driven by the demand outlook in India, with growing AI adoption and sovereign data requirements increasingly mandating that workloads for governments, enterprises and even global consumer platforms be delivered within the country.

“The business is shifting from physical infrastructure to higher value AI ready full stack solutions; one we believe will be a new growth vector for HCL Tech. We will combine our capabilities across AI data centre design, DevOps and cloud operations as well as our software portfolio with a new AI data centre business for this”, said C Vijayakumar.

Explaining the company's strategy for the new business, he said HCLTech would not only focus on data centres from the perspective of physical infrastructure, co-location and compute capacity, but also offer AI models and applications on top of the infrastructure for both enterprise and government clients. HCLTech also plans to use these data centres for its own managed services contracts with global clients, particularly fixed-price and outcome-based engagements. "We can continue to consume our own capacity and deliver them much more cost-effectively for our clients," he said.

While the company did not elaborate on the roadmap for building the 50 MW facility, it said the initial investment of ₹3,500 crore would be funded through a combination of debt and equity. HCLTech also said it could bring in strategic partners to help fund the project.

With HCLTech's annualised Advanced AI revenue now standing at $688 million, and Q1 FY27 Advanced AI revenue at $171 million—up 10.6% quarter-on-quarter and 62.1% year-on-year—the company said its shift from the earlier stance of staying away from the asset-heavy data centre business has become a logical extension of its AI strategy.

While HCLTech had said last year that it was not keen on the investment-heavy data centre opportunity, the AI boom has altered its outlook. "AI has made compute and data centre capacity very scarce, and data centre capacity and compute have become the strategic bottleneck in the entire value chain. So, owning a foothold will allow us to sell the full stack of what we believe are higher-margin services, with sovereign assurance, to both enterprise clients and governments," C Vijayakumar said.