ICT market of Kazakhstan

IT market of Kazakhstan

Main article: Kazakhstan IT market

Communication in Kazakhstan

Main article: Communication (Kazakhstan market)

Chronicle

2023: Market growth by 41.1% to KZT1.1 trillion

At the end of 2023, the volume of the information and communication technologies market in Kazakhstan reached approximately 1.1 trillion tenge (about 226.43 billion rubles at the exchange rate as of April 27, 2024). This is 41.1% more compared to the result for the previous year, when the costs in the sector under consideration were estimated at 777.2 billion tenge. Such figures are given in the study, the results of which were released at the end of March 2024.

According to Finprom, the report takes into account expenses in the field of computer programming, as well as consulting and other related services. In 2023, the largest segment of the ICT market in Kazakhstan was the development of software with a result of 599 billion tenge (approximately 124.55 billion rubles). The growth in relation to 2022, when an indicator of 373.7 billion tenge was recorded, amounted to 60.3%. Consulting and practical services in the field of information technology in 2023 brought 79.2 billion tenge (16.47 billion rubles), which is 145.9% more compared to the previous year. 72 billion tenge (14.97 billion rubles) was spent on software support - plus 86.7% year-on-year.

Finprom

From a regional point of view, the most services in the IT sector in 2023 were provided in Almaty - in the amount of 579.3 billion tenge (120.45 billion rubles), which is 52.2% more than a year earlier. Astana is on the second line - 402.5 billion tenge (83.69 billion rubles), which corresponds to an increase of 25.2% compared to 2022. Next come Karaganda (17.3 billion tenge, plus 0.7%), West Kazakhstan (16 billion tenge, annual growth of 3.8 times) and Kostanay (11.4 billion tenge, plus 78.7%) of the region. The least services in the sector were provided in Ulytau (192.1 million tenge), Turkestan (542.1 million tenge) and Zhetysu (1.2 billion tenge) regions.

According to the International Telecommunication Union (ITU), the level of availability of mobile Internet for the population of Kazakhstan is estimated at 99%, fixed - at 96%. As of the end of February 2024, the number of cellular subscribers with access to the Internet reached 17.9 million in the country - 3.9% more than a year earlier. At the same time, the number of subscribers to the fixed Internet increased by 5.3% over the year, reaching 3.1 million. Moreover, against the background of dynamic audience growth, the quality of services increases. So, according to the Speedtest Global Index, in February 2024, the speed of fixed Internet in Kazakhstan increased by 24% over the year, amounting to 50.7 Mbps. The speed of mobile Internet access, in turn, rose by 50.8% over the year - from 23.68 to 35.71 Mbps.

Finprom

Kazakhstan is actively developing FWA (Fixed Wireless Access) technology, or fixed wireless access. It is seen as an alternative to wired broadband. In remote and hard-to-reach areas with low population density, it is unprofitable for telecom operators to deploy fiber. At the same time, FWA services based on 5G provide a reduction in financial costs and allow organizing high-speed data networks in such an area in a short time. One of the leaders in the introduction of 5G FWA in Kazakhstan is the mobile operator Tele2/Altel. The company offers technology capabilities not only for mobile devices, but also as a local alternative to broadband Internet access without the need for complex installation.

The country also continues to expand the telecommunications infrastructure in the villages. After the completion of the project in 2027, at least 2.3 million residents of small settlements will be able to connect to a high-speed communication infrastructure with an Internet access rate of 100 Mbps.^[1]

2022: Kazakhstan's ICT market is growing from year to year. Main drivers

The ICT market of Kazakhstan in 2018-2022 demonstrated the CAGR indicator (average annual growth rate in complex percentages) at the level of 9.8%, reaching $5.44 billion (2504.2 billion tenge) by the end of this period. The highest dynamics was recorded in the segments of cloud services (plus 39%), IT equipment (plus 18%) and software (plus 12%). At the end of 2023, the growth of the ICT market is estimated at 8.3% - up to $5.89 billion. This is stated in the materials of the Ministry of Digital Development, Innovation and Aerospace Industry of Kazakhstan, with which TAdviser got acquainted in early August 2024.

Kazakhstan pays special attention to the development of the IT industry. President Kassym-Jomart Tokayev instructed to bring the annual export of IT services to $1 billion by 2026, train at least 100 thousand highly qualified IT specialists by 2025 and ensure IT's contribution to GDP growth of at least 1%. There are several factors contributing to the rapid development of the ICT market in Kazakhstan.

Government support measures

The country, as noted, has formed unique conditions for the development of the IT industry. In particular, the AstanaHub technopark has a zero tax rate for IT companies, preferential conditions for their placement and various acceleration programs. In addition, a set of industry support measures has been developed and implemented, including stimulating IT exports, training IT personnel, etc.

Growing Demand for Automation and Digital Transformation

This trend is observed both in large and very large segments, as well as in small and medium-sized companies. The demand driver is the financial and mining sectors, as well as retail, professional services, industry and the quasi-public sector (an area of ​ ​ the economy that is in connection with the state, while maintaining a significant degree of autonomy). The development of automation and digital transformation contribute to investments in IT equipment, services, software, cloud services, etc.

Government Initiatives to Build a Digital Government

We are talking about providing the population with high-quality electronic services and affordable, Internet as well as about the digital transformation of public administration in general. The public sector traditionally occupies a large share in the country's economy. Significant investments are being made within the framework of state the Digital Kazakhstan, Technological Breakthrough through Digitalization, Science and Innovation program. In addition, the Affordable Internet initiative has been approved, which involves investments in the creation of data centers (), DPC the deployment of networks 5G and the expansion of telecommunications infrastructure.

Growth of Kazakhstan's economy

As of the end of 2023, the government predicts the country's GDP to grow at the level of 5-6% annually. The World Bank expects Kazakhstan's economy to grow within 2-4% annually. This will further expand the regional ICT market.

Developed financial and guest sectors in Kazakhstan

The drivers of the digitalization of the republic's economy are developed even against the background of world leaders of financial and guest platforms. They, as emphasized in the review, set the general pace and are an example for digitalization and other industries.

The stable positive dynamics in the ICT market of Kazakhstan is also associated with an explosive growth in demand for remote work formats, with the development of digital educational and entertainment services that have become widespread during the COVID-19 pandemic. Another stimulating factor is the changes caused by scientific and technological progress. Emerging technologies can significantly improve business efficiency and productivity. In addition, the ICT sector as a whole is developing faster than traditional industries due to the involvement of an increasing number of users both in the commercial segment and in the consumer market.

At the same time, the authors of the study point to a number of obstacles restraining the development of the ICT market in Kazakhstan. This, in particular, is a high concentration of the state and quasi-state sectors in the country's economy, which negatively affects the development of competition. There is also a significant technological dependence on foreign suppliers, including foreign equipment manufacturers. A shortage of ICT personnel remains: despite significant efforts by the state to raise and retain qualified employees in the country, there is a shortage of them in the industry. So, according to IDC estimates, the additional need for ICT personnel may amount to about 30 thousand people during 2024. Considering Kazakhstan's status as a landlocked country, about 80% of oil exports from Kazakhstan are carried out through the Caspian Pipeline Consortium (CPC). If the operation of the CPC, loading or transport operations in the Black Sea are disrupted, this may have a negative impact on the development of the republic's economy.

According to the IDC forecast, the fastest growing segments of Kazakhstan's ICT market until 2027 will be cloud services (CAGR + 20.9%), IT services (CAGR + 14.8%) and software (CAGR + 13%). Traditional market segments - equipment and communication services will grow more slowly - 3.6% and 5.8%^[2]

2021: Kazakh authorities develop ICT industry development concept

At the end of March 2021, the Ministry of Digital Development, Innovation, Aerospace Industry of the Republic of Kazakhstan presented the concept of "Digital Lifestyle (DigitEL)," which defines a vision for the development of the ICT industry and the digital sphere throughout the country.

The main idea of ​ ​ the concept is to ensure "high-quality, thoughtful, effective and transparent" interaction of the population and the business community with the state. For this, a mechanism for digital transformation in state bodies and optimization of state functions will be launched, solutions for infrastructure development in ICT, digital data management, etc. will be worked out, the document says.

It describes current (by March 2021) modern trends and key technologies of the future. Among them are artificial intelligence, IoT and 5G.

Kazakh authorities present ICT industry development concept

The ministry listed several reasons and conditions that interfere with the development of the Kazakh IT industry:

• there are gaps in the legislation of the country, in particular, there are no rules governing the process of digital transformation, reengineering and assessing the digital maturity of the public sector and the industry as a whole;
• one of the problems is the low use of digital tools in the manufacturing sector, which is due to a lack of understanding of business opportunities and the potential for using digital technologies;
• misunderstanding by individual government agencies and individuals of the benefits of digitalization carries a huge risk for the development of the country as a whole;
• in Kazakhstan, in many sectors of the economy, there is an acute problem with the availability of highly qualified ICT specialists;
• there is a problem with the use of unlicensed software. According to the results of the study, the BSA "Global Software Survey" (BSA Global Software Survey), the level of use of unlicensed software in Kazakhstan in 2019 was 74%.^[3]

Notes