Microsoft accelerates India expansion with $17.5 billion investment as Hyderabad data centre nears 2026 launch

Microsoft’s largest data centre in India is scheduled to become operational by mid-2026, according to Puneet Chandok, president of Microsoft India and South Asia. The Hyderabad facility represents a critical component of the company’s $17.5 billion investment in the country, which stands as its largest expenditure in Asia. This capital deployment is designed to support Azure cloud services and the Copilot 365 AI assistant, responding to what Chandok described as "massive demand" for these technologies in the region.

The new infrastructure will serve a growing base of enterprise customers, including major Indian IT firms such as Infosys, Cognizant, and Tata Consultancy Services. Each of these organisations has secured approximately 50,000 licenses for Copilot, underscoring the scale of adoption for Microsoft’s artificial intelligence tools within the local technology sector. The Hyderabad site, located in a southern tech hub where Microsoft already maintains a significant presence, will be the company’s biggest facility in India, although specific capacity figures have not been disclosed.

Chandok highlighted the urgency of the build-out, stating that Microsoft is moving faster than its competitors to bring the infrastructure online. The expansion aligns with a broader corporate strategy to capitalise on India’s population of more than one billion internet users and its deep pool of technical talent. Like rivals Alphabet and Amazon, Microsoft views the country as a potentially profitable market for AI services, essential for demonstrating to investors that its substantial technology bets will yield returns.

The investment package includes a $3 billion pledge made at the start of 2025, in addition to the recently announced $17.5 billion commitment. Microsoft currently employs more than 22,000 people in India, with several AI features being developed locally. However, the rapid expansion has intensified competition for skilled workers. Chandok noted a "war for talent" in the country, where demand for staff exceeds supply, making recruitment increasingly difficult despite the company’s significant local footprint.

As the tech giant seeks to prove the profitability of its AI strategy, the Hyderabad data centre serves as a tangible milestone in its South Asian operations. The facility’s completion in 2026 will mark a significant escalation in Microsoft’s physical presence in the region, providing the necessary compute power to support the widespread adoption of Copilot 365 and Azure services among India’s largest enterprises.