Microsoft said that it plans to establish its largest India data centre region in Hyderabad as the tech firm looks to tap into a growing digital market where more businesses are adopting new-age tech capabilities like the cloud and AI to drive their growth.

A data centre region essentially means a set of data centres spread across a wide expanse of land. The company has reportedly acquired three land parcels for the Hyderabad data centre region.

Microsoft did not disclose the investment details. However, KT Rama Rao, Minister Municipal Administration & Urban Development, Industries & Commerce, and Information Technology, Government of Telangana mentioned in a tweet that the company will be investing over ₹15,000 crore for the development of the project, making it one of the largest FDIs that Telangana has attracted. The data centre is expected to be operational by 2025.

"This strategic investment is aligned with Microsoft's commitment to help customers thrive in a cloud and AI-enabled digital economy and will become part of the world's largest cloud infrastructure," the company said in a statement.

The Hyderabad data centre region will be an addition to Microsoft's existing network of three regions in India across Pune, Mumbai, and Chennai. It will offer the entire Microsoft portfolio across the cloud, data solutions, artificial intelligence (AI), productivity tools, and customer relationship management (CRM) with advanced data security, for enterprises, start-ups, developers, education, and government institutions.

According to IDC, Microsoft data centre regions in India contributed $9.5 billion revenue to the economy between 2016 and 2020. The company already counts Jio, Inmobi, Infosys, TCS, Apollo Hospitals, State Bank of India and Flipkart among its customers in India. Microsoft's data centre regions in the country are also estimated to have added about 1.5 million jobs to the local economy over five years, including 169,000 new skilled IT jobs.

"Cloud services are poised to play a critical role in reimagining the future of business and governance and enabling overall inclusion in the country. The new datacenter will augment Microsoft’s cloud capabilities and capacity to support those working across the country," said Anant Maheshwari, president at Microsoft India.

India's data centre market is expected to touch $5 billion by 2025 on the back of growing internet penetration, increased cloud adoption, government's digitisation initiatives and the push towards localisation, Nasscom had said in a study published last year. The country is already home to over 80 third-party datacentres and is witnessing investments in around 15 projects annually, with growing presence of both local and international players. Analysts say that India has a major cost advantage compared to matured regions both on development as well as operational costs.

"Skilled workforce is among the major site selection criteria for data centre development and operations. Engineering skill shortage is a major challenge in developed datacentre markets such as the North America and Western Europe, where it is a benefit for India to position itself as a major datacentre hub," analysts at Nasscom said. Besides, India has a huge data consuming market, a growing submarine cable connectivity system, and a fairly stable geography (with most cities not prone to frequent earthquakes/other natural disasters). "These factors coupled with the increasing shift towards cloud makes India a hotspot for datacentres," they added.

Microsoft data center

Microsoft to set up its largest India data centre in Hyderabad