The biggest issue, next to gas and grocery prices, in the upcoming mid-term elections in the US is the environmental impact of data centres.
Citizens there are up in arms over the ravenous water and power needs of these campuses. But here in India, State governments are falling over each other to roll out the red carpet to data centres without even basic civic audits.
The latest to join the blind gold rush is Telangana, which announced on September 7 that Tata Consultancy Services (TCS) has chosen Hyderabad to build its first data centre to cater to global companies.
About 264 acres of land southeast of the city have been allocated to TCS subsidiary Hypervolt to build an AI-specific facility with an investment of Rs 70,000 crore. When fully scaled, it will house high-density GPUs that will need 1 GW of electricity, roughly equivalent to the power demand of a sizeable industrial cluster.
As for water, the government did not reveal specific figures but TCS said, without elaboration, that the ‘liquid-cooled’ campus would be ‘water neutral’. It is estimated that large data centres use up to 5 million gallons of water per day for cooling purposes alone.
The announcement was remarkable for the breathless excitement from the government. While Chief Minister A Revanth Reddy said he would ensure the project is operational by mid-2028, one of his colleagues promised to work with the “speed of thought”.
While the government is keen to give the impression that this is a project in which “frontline AI companies” will do AI work, the reality is that TCS will be a landlord renting out compute to all comers.
As for jobs, while ministers claimed that about 7,000 direct jobs would be created, TCS itself was content to say "several thousand" are likely. The company’s circumspection is well-founded. Much of data centre job creation potential is limited to construction work in the buildout phase of the project with relatively fewer maintenance workers needed thereafter. The number of permanent specialists needed on site is even fewer.
In the US, the job potential of data centres is estimated at 0.2 to 0.4 jobs per megawatt. Even a 1 GW project such as the one TCS is attempting to build near Hyderabad might need no more than 1,000 permanent workers.
Even assuming that every direct data centre job supports roughly 4.5 to 6 indirect jobs in the broader economy, the concessions given to TCS in terms of cost of land, tax holidays and infrastructure support appear to be generous in relation to job creation.
Energetic investment seeking by governments is welcome, provided proposals are properly vetted for their impact on the local economy, society, and environment. Governments in the South have always taken the lead in attracting IT sector investment but all too often public resources and policy relaxations have been awarded to companies without extracting commensurate commitments on job security and employee welfare.
It is because of this skew that all locations where data centre projects are taking shape, such as Vizag in Andhra Pradesh and Thane in Maharashtra, are witnessing civic protests.
All too often, State governments dole out privileges to investors with an eye on the real estate dividend that will accrue to the builder lobby rather than citizen welfare. In the case of data centres, governments must commit to prioritising services to citizens and make full disclosure of the terms offered to investors.