Microsoft Expands AI and Cloud Service Capabilities with New $3B India Investment

Tech giant Microsoft is set to spend up to $3 billion on AI and Azure cloud expansion in India. According to CEO Satya Nadella, Microsoft’s AI investment is aimed at doubling India’s tech expertise. Reuters reported that the investment will also help with cost reduction in a bid to achieve profitability.

Biggest Investment

Microsoft’s new investment is the largest that the US big tech has made in India. The company plans to carry it out over a two year period. The investment is part of Microsoft’s recent plan that’s aimed at investing $80 billion in AI data centers in 2025.

India is a critical growth market for most big techs. With a population of over 1.4 billion people and affordable internet connection, this Asian country has attracted a host of other tech companies including Meta and Nvidia. Microsoft plans to use its $3 billion investment on infrastructure and upskilling Indians on AI.

“Beyond infrastructure, Microsoft is also looking to train 10 million Indians in AI by 2030, which is a continuation of their promise to offer AI skilling opportunities to 2 million people by 2025,” Nadella said.

Microsoft has cloud regions in India’s Central, Southern, and Western regions. The company currently has 300 data centers and over 60 cloud regions across the world. Last year, the Windows operating system maker upskilled 2.4 million people in AI across India

India’s AI Contribution

The focus of Microsoft’s India expansion is people living in rural areas and smaller cities. The big tech wants to break barriers and make AI access more equitable. Currently, Microsoft has over 20,000 employees who work from 10 cities across India.

Speaking at a conference held in India’s Bengaluru city, Microsoft CEO said his company wants to help local tech communities to develop and leverage its talent base. Nadella also noted the contribution that the Indian community has made towards Microsoft, particularly in AI projects through its generative AI-based developer tool, GitHub Copilot.

“India is the second-largest (developer community on GitHub) after the United States. In fact, it’s projected to be the largest in 2028. We also have contributions from India AI projects that are just second to the United States,” Nadella said.

Pressure for AI Returns

Like other big techs, Microsoft is under pressure to demonstrate how its investments in AI technology will provide returns. GitHub is among the few AI bets that has generated returns for the Azure cloud-computing service provider. In July 2024, the tech giant reported a $2 billion annual run-rate from the AI tool. Last month, Microsoft announced plans to integrate third-party AI models into its 365 Copilot products to diversify its AI capabilities.

“AI doesn’t sit on its own; it requires the entire compute stack. Infrastructure needs to be the highest priority, and we are innovating at every layer of it,” Nadella added.

Nadella is in India for the Microsoft AI Tour. Hundreds of Indians participated in the event on January 7, 2024. One of them was software engineer Prashant Bhanawat, whose firm uses Microsoft AI and cloud services like Azure AI.

“This is a chance for us to see the products in development before they are rolled out, and to obviously see Satya Nadella,” Bhanawat said.

Nadella met India’s Prime Minister, Narendra Modi to discuss innovation, technology and AI. Microsoft’s focus on India comes at a time when global demand for cloud and AI services is on the rise. By expanding to India, Microsoft has an opportunity to participate in one of the most dynamic digital economies in the world.