Microsoft plans bigger data centre investment in India beyond 2026, to keep hiring AI talent

“As part of our $3 billion investment plan over this year and next, our Hyderabad data center, one of our largest data centers in the region, will be operational in June 2026. This will be added to our data center hubs in Mumbai, Pune and Chennai, as well as two Jio-Azure regions (along with Reliance Industries) in Maharashtra and Gujarat,” said Puneet Chandok, head of Microsoft India and South Asia. “All of our data centers are AI-ready, and that’s where we’ve invested so far. But our investments are structural, not cyclical. We’ll continue to invest more, and we’ll take a deeper look at those investments next week.”

Chandok spoke privately Mint Ahead of Microsoft’s global CEO and chairman Satya Nadella’s India tour from December 10-12. Nadella is expected to make important statements about artificial intelligence infrastructure during his visit.

Google announced on October 14 that it will invest $15 billion to build a 1 gigawatt (GW) AI data center in Visakhapatnam, Andhra Pradesh, in partnership with homegrown conglomerate Adani Group and telecommunications giant Airtel.

Chandok declined to comment on Microsoft’s direct competitors.

He also doesn’t expect the influx of AI to reduce Microsoft’s net hiring in India. “We already have 22,000 AI engineers in India and we continue to hire more. Of course, we are constantly looking for AI skills when hiring people and we are also looking for skilled people, where we dedicate one day every month to focus on skill development.”

At the time of writing, there were 420 job openings in Microsoft India. About 92%, or 385, of the roles listed on Microsoft’s India careers page required AI skills in engineering, sales and other operations.

“It’s not like all jobs will disappear. As we enable multi-agent coordination in our workflow, we’ll see mundane jobs replaced by value-added work. This shift is already happening, and we’re seeing the rise of new training methods like micro-degrees in AI to make it happen,” Chandok added.

Microsoft’s India arm reported ₹28,754.77 crore ($3.18 billion) operating income and net profit in FY25 ₹1,245.18 crore ($138 million). Overall, Microsoft’s India revenue grew 27% year-on-year, while net profit rose 39%. The company continues its long-term partnership with OpenAI and delivers OpenAI’s generative AI applications through Azure and Copilot.

Chandok said Microsoft is already seeing meaningful and large-scale use of AI services in India.

“We now have over 1,000 customers in India using Microsoft Azure OpenAI,” he said, adding that these are no longer experimental deployments. According to him, organizations like Apollo Healthcare, State Bank of India and Physics Wallah are scaling Copilot-based solutions across their operations, from clinical assistance and handling of customer queries to AI lessons for millions of students. These reflect in-depth adoption rather than pilot-stage activities, he said.

But despite the momentum, Azure remains second only to Amazon Web Services in global and India cloud market share. Data from Synergy Research last month showed that AWS accounts for 29% of the Indian cloud services market, followed by Microsoft Azure at 21%.

Microsoft continues to play a central role in India’s AI adoption due to its long-standing local presence and large cloud footprint, analysts said.

Kashyap Kompella, senior AI analyst and founder of RPA2AI Research, said, “Microsoft has a well-established presence in India and is generally viewed by businesses as one of the safest tech companies to work for in terms of compliance and security. The company’s AI journey, especially in the last year, has been complicated by partnering with OpenAI rather than building its own core capabilities. But today, as businesses start adopting AI at scale, Microsoft stands as a company that will achieve huge business volume.”

Kompella added that Microsoft’s significant cloud presence in India means they will likely continue to invest in AI infrastructure in the country, and the value they will realize through long-standing partnerships with technology outsourcing companies will prove useful as the industry matures.

Service integrators are working along similar lines. In June, India’s largest technology outsourcing company Tata Consultancy Services (TCS) expanded its partnership with Microsoft to offer enterprise AI services to customers.

Chandok agreed and added that such partnerships are critical in the long term. “Our partnership with TCS is very deep and also a long-standing one. We see the advancement of AI not as a competitor but as a valuable partner. We continue to work closely together and that is what is leading to increased adoption of AI in India. We will see more of these, at larger scales, in the future.”