New Delhi: India’s technology sector is expected to see generative artificial intelligence (generative AI) and associated data applications define customer orders, financial growth and technical innovation in 2025. This in turn is expected to generate a surge in the demand for data centers and their services.
Industry players, ranging from major U.S. technology firms to data center and software services companies, are bracing for a boom in demand amid expectations that inflation fears in the West will ease and support Indian government’s national research and development (R&D) spending in the coming year.
On December 12, Mint reported that the Center was evaluating plans to deploy $3 billion in incentives to boost R&D in India. The country, already a hub for new technical talent, is now looking to invest in innovation to move up the value ladder, instead of being a user economy until now.
At the heart of this initiative is establishing generative AI as a key near-term differentiator and its impact on data centers.
On September 28, Mint reported that Adani Group is likely to inject $4 billion to establish a net data center capacity of 1.5 GW (gigawatt) over the next two years, a plan that initially had a five-year timetable. This surge is driven by the influx of AI into businesses and the expected data boom that is expected to accompany it.
Ashish Arora, managing director of Nxtra, a subsidiary of Bharti Enterprises, also added that the company is investing $600 million to double its net data center capacity to 400 MW (megawatt) by 2026, part of which will be expanded in 2025 itself.
Earlier this month, Bloomberg reported that Yotta Data Services, a subsidiary of the Hiranandani Group, is close to finalizing a $500 million investment through a group of creditors to expand its data center “fleets”, which are already operational in Greater Noida in Uttar Pradesh and Navi Mumbai in Maharashtra. .
This rise comes even as generative AI struggles to keep up with the increased hype of rapidly transforming companies. Driven by concerns over data privacy and copyright, companies have remained largely cautious in rapid adoption of technology throughout this year.
However, the first signs of change are there. On December 19, Accenture, the world’s largest technology services outsourcing and consulting firm and a bellwether of India’s $300 billion IT services industry, revealed $1.2 billion in net new generative AI contracts with companies around the world. Generative AI thus accounted for 6.4% of total new business during the company’s Q1FY25 period, which it reports runs from September to November.
The first week of January will therefore be crucial to see if India’s IT services stalwarts, led by heavyweights Tata Consultancy Services (TCS), Infosys and HCL Technologies, can keep pace with Accenture when it comes to running applications. of generative AI with its customers.
Earlier this financial year, K. Krithivasan, Managing Director of TCS, had said that the company had a pipeline of business worth $1.5 billion for generative AI. During the company’s October earnings call for Q2FY25, Krithivasan further added that the company has 600 active generative AI projects. However, most importantly, he refused to comment on the amount of revenue TCS earns from the younger AI idea.
Adoption expected to increase
Industry players, however, are optimistic that generative AI will likely be increasingly adopted by 2025, as the technology itself becomes more mature and companies find a way to implement it. at work at the heart.
On December 11, Google announced its next generation of generative AI models under the Gemini 2.0 suite, emphasizing its suitability for “agentic” AI applications, which experts said was a clear sign of the company’s desire to company to convince businesses of the ease of use of the technology.
“AI is no longer just a tool: it is becoming the backbone of how industries innovate, evolve and solve their most complex challenges,” said Sindhu Gangadharan, president of the Nasscom Center-affiliated think tank and Managing Director of SAP Labs India. “AI is evolving from assistive to truly intelligent, with autonomous agents capable of making decisions and orchestrating entire ecosystems.
Gangadharan added that personalized AI, in particular, is emerging as a transformative force in 2025, enabling organizations to design AI solutions tailored to their specific needs. “This trend should democratize AI innovation. For India, this is an incredible opportunity: we are perfectly positioned to lead this AI-driven transformation,” she said.
“More and more organizations are experimenting with creating personalized AI solutions tailored to industry needs, including personalized AI co-pilots and agents,” said Irina Ghose, Managing Director, Microsoft India. She added that Indian companies are at the forefront of this shift in scaling AI and data. use cases to “drive innovation, improve productivity and streamline workflows, thereby placing India on the brink of an AI-driven renaissance.”
Ghose further added that when it comes to generative AI, there is no doubt that with the right combination of data and associated computing power, businesses across industries can be significantly redefined.
“2024 was the year of AI in action, and we saw a transformative shift in how businesses approach AI, moving from exploration to execution. More and more organizations are experimenting with creating personalized AI solutions tailored directly to industry needs, including personalized co-pilots. and AI agents. The business opportunity for AI is clear. According to an IDC study, for every dollar a company invests in generative AI, the return on investment is 3.7x. it takes 12 months or less at the enterprise level,” Ghose said.
Ipsita Dasgupta, Managing Director, HP India, said it is important to empower SMEs (small and medium enterprises), which contribute around 30% of GDP but face various hurdles, with AI technology. “The future of work means a more flexible, inclusive and digitally connected environment, where technology empowers individuals and businesses of all sizes. AI PCs and advanced workstations will be at the heart of this change,” Dasgupta said.
The key, experts say, will lie in how generative AI develops in the coming year. Pointing out that generative AI is still only a two-year-old technology, Jayanth Kolla, partner at technology consultant Convergence Catalyst, said we still understand a lot about it.
“That said, the advent of domain-specific applications through generative AI is a key area of business interest, and whichever way you look at it, the rise in demand for data centers data is therefore inevitable in India. As businesses increase their consumption of AI, this demand will only increase, without any fear of slowdown or saturation, at least in the short term,” said Kolla.
Developments in AI and data centers may also take new directions in the coming year. For AI, a lot will depend on what American giants Google, Meta, Microsoft and OpenAI do in the coming year. By 2024, reasoning AI has already made its debut, although its use cases will only expand over time. For data centers, solving the problem of energy consumption will be essential, as the targets of net zero emissions and the climate change agreement move closer.
The first evidence of the rise of generative AI, according to each stakeholder, will likely appear during the first quarter of the next fiscal year, suggesting that the real boom in AI and data centers could take at least until the middle of the year to occur. . Despite this, they are all convinced that unlike the promise of 5G or satellite internet, no external factors can prevent 2025 from being the year of data centers and generative AI to define industries Indian technologies.
