The CEO of QazCloud on the future of cloud technologies in Kazakhstan and cooperation with VK Cloud

Kasym Yesergapov, CEO of QazCloud

About QazCloud

Since 2017, the Kazakh market has changed fundamentally. At that time, many IT departments relied on their own server infrastructures—racks and data centers.

Within the Samruk-Kazyna Fund group, questions arose regarding the number of existing servers, the need for their upgrade, and the state of outdated systems. Furthermore, technical support for large-scale IT infrastructure presented several challenges. With the emergence of QazCloud in the market, the situation changed. Many industrial holding companies switched to using cloud infrastructure. We are not a company that came to compete with other cloud operators who were at an early stage of development at that time. Rather, QazCloud played its role in shaping the market for cloud services and information security. Today, our company is considered a benchmark for other participants in this industry. This is confirmed by figures and facts.

The number of providers entering this market has grown significantly; only last year, around 20 new cloud operators appeared, starting to provide their services and actively promoting them.

The emergence of QazCloud, although many consider it administrative, actually helped change the dynamics of the cloud computing market and reduce dependence on internal structures. This means that companies began to focus on their core business rather than delving into specialized aspects. Many large companies were actively expanding their range of internal processes at that time—handling transportation themselves, providing HR services, and building non-production server infrastructures. This is not always profitable or correct, as it can dilute the focus on the main activity. For example, mining companies should focus on ore processing and mineral extraction, while oil and gas enterprises should stick to their profile. Highly specialized companies like ours help businesses concentrate on their strategic goals.

Over these seven years, the cloud market has grown and become noticeably more mature. Companies already realize that cloud operators are necessary to create fast, scalable infrastructure.

According to experts, IT spending in Kazakhstan increased 2.4 times between 2017 and 2021.

In 2022, the growth rate of IT spending slowed to 7.4% compared to 2021, but demand for cloud services among local companies continues to grow—by more than 30% compared to 2021. As a result, the share of spending on cloud services increased to 6.5% of total corporate IT costs. This indicator is still significantly lower than in other emerging markets. For example, in Russia, the share of spending on cloud services in 2022 was 17%, and in Western Europe, it was more than 25%. Despite this, we believe that Kazakhstan has significantly approached the global level of cloud market development.

Another area of our activity is information security. The market in this field in Kazakhstan began to form quite recently—only seven years ago. QazCloud also contributed to the creation of widely recognized security approaches by developing a system of tools and clearly distributing responsibilities. Our clients have control over access and administration of internal systems, while we ensure the protection of the external perimeter of their information systems, as well as server and computer infrastructure. Our team is one of the strongest and most professional in the market. We have specialized groups that deal with preventing cyberattacks and vulnerability testing. Our specialists undergo serious training, considering various client systems and the specifics of their industries—from logistics to oil extraction—which implies different approaches to data and system protection.

How the company has changed over this time

Since 2017, our company began to form on the basis of Kazakhtelecom and its data centers, as well as based on their communication channels. Initially, Kazakhtelecom provided the channel part to ensure connectivity for portfolio companies and other market players. QazCloud, on the other hand, created its own virtual environment. Currently, QazCloud owns its own data centers, which serve as the basis of their infrastructure. There is also a channel part in Astana city, where its own optics are located, allowing us to reduce client costs and provide access to the cloud. We deployed several clouds, forming a triangle between Almaty, Astana, and Pavlodar, using Kazakhtelecom’s channels and data centers. QazCloud owns a backup point in Akkol for data storage. From the perspective of information security, we have expanded our services, and the product line has grown significantly.

Today, QazCloud is a highly specialized operator of cloud computing and information security. Our engineering staff numbers about 500 people, and it is important to note that the share of administrative personnel is low—only about 7%, which is one of the best indicators in the market. We are already considered a major operator, and at the moment, we are actively exploring opportunities for market expansion.

Companies using cloud services

Information security services are aimed at large corporations and holdings possessing extensive volumes of data, which attract the attention of hackers and fraudsters. Cloud services are used by companies of various scales—and we strive to meet all their needs. Thus, since the beginning of last year, we have begun expanding services in the field of virtualization. For this, we installed the VK Cloud platform and recommend it to our clients.

The role of QazCloud in the development of Kazakhstan's economy

We help the state establish quality standards in the market for cloud services and information security. We also assist the regulator in forming new rules and requirements for information storage and protection. Our new product—the electronic store SKstore.kz—helps small and medium-sized businesses with procurement. QazCloud dispelled the myth about the opacity of the Fund's procurement by creating an electronic store where small, routine purchases can be made. This product has proven its effectiveness: of the 7,000 suppliers on the portal, more than 60% are from regions, and more than half are individual entrepreneurs. Thus, the Fund has become more social by opening its procurements to ordinary residents of the country.

We adhere to the motto: the less our clients remember us, the better we work. This is our internal guideline because uninterrupted operation means no problems for our customers.

Challenges

In our work, we often face the comparison between capital and operational expenditures when choosing between own infrastructure and cloud computing. The comparison is often conducted incorrectly. For example, the purchase of a server is compared with renting cloud resources, without taking into account that server utilization may be only 10-20% of its rated capacity, which entails additional costs for depreciation and technical support. In the cloud, services are paid on a Pay-as-you-go model, meaning clients pay only for actually used resources.

In the field of information security, we often encounter the untimely realization of problems, which often become apparent only after an incident occurs, when data has already been attacked or encrypted. Therefore, it is important to ensure daily information protection.

The most exciting cases are the migration of huge databases, when it is necessary to move an extensive storage facility from one place to another. This is a non-trivial task, especially considering the need for uninterrupted operation of all client systems and business processes, such as ticket sales.

We investigate detective stories about attempts at mining and hacking server infrastructures. It is engaging and responsible to counter cyber threats that can disrupt corporate operations. There have been many such investigations over the past few years.

Achievements

In 2022-2023, we successfully launched an electronic store that gained recognition among users. We also carried out migrations of large companies' infrastructures and state property objects to the cloud. In addition, we launched the second phase of our data center in the city of Kosshy.

Cooperation with VK Cloud in Kazakhstan

We began cooperating more than a year ago. During this time, more than 100 clients from different segments of the economy, including government institutions, retail, finance, IT, industry, and other sectors, have moved to the VK Cloud platform. Customers from neighboring countries have also appeared. For us, this is an interesting project because it allowed bringing a large number of IT tools previously unavailable locally but in demand everywhere to Kazakhstan. Thus, more than 20 pre-configured IaaS and PaaS services are available on VK Cloud—ready-to-use solutions at the click of a button. This means that infrastructure or data storage can be deployed in a few minutes, modern tools for development and big data work can be connected, and information backup and recovery can be ensured.

Together, we implement interesting initiatives for business. For example, in January of this year, as part of the startup support program, Kazakh teams could receive a grant of up to 10,000,000 tenge for product development or its advancement.

Moreover, our clients have gained the opportunity to quickly scale their business into other regions: they can continue working in their own cloud and develop their product in external markets, complying with legislation on data storage. VK Cloud, by the way, is currently the only foreign vendor to have localized its platform in Kazakhstan.

Plans

In the next six months, we will focus on improving our services, expanding our portfolio, and developing new products and tools. We are actively exploring the possibilities of applying 5G and artificial intelligence technologies to find ways to improve our clients' experience. This requires significant resources and a transition to more productive infrastructure, which includes using a different level of video cards and processors.