The Indian telecom sector has recently seen a surge of excitement and experimentation around Generative artificial intelligence (GenAI). In 2024, the influence of GenAI has expanded well beyond the conceptual stage with cloud-connected agents assisting multiple use cases and impacting industries such as technology and innovation, financial services, media and entertainment, and telecom. Nearly 70 per cent of telecom CEOs predict that in the next three years, GenAI will fundamentally transform how their companies create, deliver and capture value.

Need for digital transformation

Key trends in telecommunications are accelerating the push for digital transformation. One primary driver is the sharp rise in capex and opex, with 85 per cent of a projected $600 billion in global capex (2022-25) allocated to 5G advancements. These investments support increasing network demands, as 5G’s share in total mobile data traffic is expected to surge by 76 per cent by 2029. Additionally, low customer satisfaction poses a challenge – 55 per cent of customers report cancelling telecom services following poor experiences. To address these issues, telecom companies are exploring new monetisation strategies. Notably, 65 per cent of telcos implementing ecosystem-based approaches are achieving significant economic impact, signalling progress in adapting to the evolving market landscape. These combined factors highlight the urgent need for digital transformation in telecom to meet rising expectations, enhance the customer experience and capitalise on emerging opportunities for sustained growth.

Challenges with public cloud

The public cloud poses various challenges. Regulatory concerns arise in cases requiring high data sensitivity and sovereignty. Survivability issues occur when systems must continue operating during connectivity outages. Latency and speed are also critical when low response times are essential, and local data processing is needed when handling high-volume or noisy data is too costly, and transferring it elsewhere is too time-consuming. Meanwhile, new use cases across industries such as telecom, retail, manufacturing, media, entertainment and finance are fuelling the demand for distributed edge cloud solutions.

Key trends in the data centre space

Several key trends are shaping the data centre space, including the rising adoption of edge computing, the rapid growth of AI and machine learning, the increasing demand for data storage and processing, a strong emphasis on sustainability, and heightened requirements for security and compliance.

Challenges for data centre providers

Data centre providers are navigating several critical challenges as they scale to meet evolving demands. The first is capacity fulfilment – addressing the rising need for transformative workloads that rely on specialised hardware configurations. Next is advanced cooling solutions, which call for innovative or modernised cooling technologies to efficiently support high-compute systems. The IT skills gap presents another hurdle, making it challenging to forecast IT demand accurately without adequate benchmarking standards. In addition, there is an increasing emphasis on sustainability, as providers strive to meet ESG – environmental social and governance targets while managing significant power requirements. Lastly, digital sovereignty is essential and data centre operators should be able to help clients in adhering to data-related regulatory compilance and
audit standards.

Recent developments in India

India is gearing up for a major digital transformation, with a strong focus on expanding data centre capacity to support next-generation workloads and innovations. Recent developments that underscore this momentum include:

  • July 2024: Anant Raj Cloud signed an MoU with Google to establish data centres totalling 300 MW of capacity across multiple locations.
  • September 2024: STT GDC announced a $3.2 billion investment to expand data centre capacity in India by 550 MW.
  • October 2024: The Maharashtra cabinet approved plans of data centre operators to set up integrated green data centre parks.

These initiatives reflect India’s commitment to building robust infrastructure to power future digital demands. Moreover, Make in India is giving a fillip to semiconductor manufacturing through various recent initiatives:

  • May 2024: Construction began on Micron’s ATMP – Assembly, Testing, Marking, and Packaging facility in Sanand, Gujarat.
  • September 2024: L&T Semicon announced a target to start chip production within two years..
  • October 2024: AMD, LAM Research and Micron India launched technical boot camps, research labs and mentorship programmes to build local expertise.

The way forward

India is preparing for the next wave of transformation: the AI-driven era. This focus extends beyond enterprises. The government, on its part, has established an AI mission, underscoring the need to scale data centre capacity to meet these ambitions.

Expanding data centre capacity is not solely aimed at supporting hyperscalers, but is also designed to serve diverse use cases that the government is actively promoting. With proactive efforts already under way, India is on track to meet future capacity demands. In addition, the country is advancing its Make in India semiconductor plan, laying a strong foundation for a self-reliant digital ecosystem.

Based on a presentation by Tushar Gupta, Enterprise Architect, Google Cloud