Debasis Mohapatra
Bengaluru, 10 April 2026
TCS’ initiatives in the data centre segment through its subsidiary ‘HyperVault’ puts it in a good space to capture “infrastructure-to-intelligence” revenue, which remains the exclusive domain of cloud hyperscalers as of now.
According to brokerage firm- Deven Choksey Research, TCS has moved upstream of the value chain by securing strategic partnerships with OpenAI and AMD to build massive 100MW (scalable to 1GW) AI-ready data centers in India.
“TCS is transitioning from a pure software services firm to a dominant AI infrastructure player through its HyperVault data center subsidiary. This allows the company to capture ‘infrastructure-to-intelligence’ revenue that was previously reserved for hyperscalers,” the brokerage firm said in a report.
Notably, company management has highlighted about the progress made in its data centre subsidiary business, which was announced in October 2025.
“Our engagements with hyperscalers and frontier AI model companies have moved beyond early exploration into design alignment, security frameworks, site due diligence, and commercial structuring. We see the demand converging around large anchor AI workloads in the 100-200 MW range per customer,” Aarthi Subramanian, Chief Operating Officer of TCS said post Q4FY26 results analyst call.
The company has partnered with Tata Power, Tata Projects, Tata Communications, as well as GE, Honeywell, ABB, Siemens, and many others for its data centre business.
In February 2026, OpenAI became the first customer of TCS for its data centre business with which both announced collaboration for 100 MW data centre.
Where is the AI business going?
TCS said its revenue from AI business touched $2.3 billion on annualised basis. The brokerage firm said revenue from AI business touched around 7.6% of its total turnover.
“AI is embedded across all mega-deal solutioning; rapid build cycles of 12–16 weeks are becoming the norm for AI deployment. Agentic AI in BPS is gaining traction,” the report said.
The report, however, flagged risks arising from cannibalisation of revenue arising from AI tools.
“Albeit at $2.3Bn annualised, AI is still only around 7.6% of revenue. If AI drives 20–30% productivity gains on run-the-business contracts (the bulk of TCS’ $30 billion revenue base), net revenue impact could be negative for several quarters before new AI-native work scales sufficiently,” the report noted.
Meanwhile, the margin from AI-powered IT work is better than legacy side of business.
“AI revenue productivity is ‘definitely much better than TCS average’ at both onsite and offshore. Margins not called out separately due to early-stage investments,” the brokerage firm noted from management commentary during analyst call.
