Thoughts on the subject from the CEO of Prime Source
In his address to the people of Kazakhstan, President Kassym-Jomart Tokayev spoke of the need to bring investment in the IT sector up to 500 billion tenge within five years.
Digital services and services for automating and robotizing processes are among the fastest-growing industries in the world. During the coronavirus crisis alone, Google shares rose by almost 20%, Amazon by 100%, EPAM — the largest IT outsourcer in the post-Soviet space — by almost 60%, and Yandex by more than 80%. Experts estimate the average annual growth of the international IT market from 2007 to 2019 at 8%, and this pace is only accelerating.
According to the ITC Trade Map, external revenue from the sale of IT services amounts to $51 billion a year in India, more than $5 billion in the Philippines, $3.2 billion in Ukraine, $1.6 billion in Belarus, and even $194 million in Armenia and $148 million in Moldova.
In his address to the people of Kazakhstan on 1 September this year, President Tokayev noted that “the development of the market for IT, engineering and other high-technology services is not only about creating added value and jobs inside the country: more and more opportunities are also emerging to export such services abroad. It is important to unlock this potential”.
Against all of the above, Kazakhstan’s current export revenue from the sale of IT services of $22 million a year looks catastrophically small. That is 7 times less than Moldova, 73 times less than Belarus and 145 times less than Ukraine — and this despite the fact that the overall level of education of the population remains relatively high, as the results of our schoolchildren and students at international olympiads in physics, mathematics and computer science show.
Aware of this development potential, domestic businesspeople have drawn up a concept for creating an IT services cluster in Almaty. The founders of Synchlarity Partners, Infin IT Solutions and Prime Source are working on the project, along with other specialists who have successfully built Kazakhstan’s largest businesses in IT: the export of products and services, and education. The goal of the project is to launch an IT development center in Almaty for 10,000 specialists with revenue of $500 million a year. What sets the project apart from the already operating Astana Hub and Almaty Tech Garden is its strict focus on exporting the services of IT specialists that are in demand worldwide.
Work on creating the IT cluster will focus on the following five areas.
First — consolidating the efforts of the market. To coordinate work on creating an IT outsourcing center, an association will be set up with three levels: a supervisory board made up of international experts; an executive body drawn from interested participants in the IT and education markets; and an operational project office.
Second — the sales market. Contracts for the provision of IT services are to be won through partnerships in the largest centers of demand for IT services: the United States (annual IT imports of $32 billion), Singapore ($12.6 billion), Japan ($11.6 billion) and others. The overheating of the market and rising salaries in the countries that export IT services — Belarus, Ukraine and others — confirm that demand exists worldwide.
Third — training specialists, including developers and engineering staff. Kazakhstan already has programming schools such as Alem, Attractor School, Alfa Data School, QWANT and others. In August 2020 it was announced that the educational platform “01” would open in Kazakhstan, co-founded by Nicolas Sadirac of the much-talked-about French private non-profit school of computer programming Ecole 42. The work of these centers will make it possible to raise the output of qualified IT specialists to several thousand a year. Engineering skills should be developed within operating IT companies and on the basis of universities.
Fourth — production standards and project experience. Building a critical mass of personnel and setting up delivery to international standards must be done through the execution of commercial projects. Only sufficient project experience will allow companies to build their processes, achieve the required level of staff qualification and get their teams working. Incidentally, under Kazakhstani law subsoil users are obliged to spend 1% of their income on research and development. The mechanism for funding the market has already been created, and the corresponding amendments have been made to the Tax Code and the Law on Subsoil and Subsoil Use.
Fifth — infrastructure. Almaty and its surroundings could become a center of gravity for the development of an IT cluster serving not only Kazakhstan but the entire region — the Urals, Siberia and Central Asia. The area around Almaty, for example the territory of the Alatau Park of Innovative Technologies, has a favorable environment and a convenient location: it is close to ski resorts, the beach areas of Kapchagai and the tourist destinations of Kolsai, Charyn and Altyn-Emel. These factors make it an attractive place for people to live. Infrastructure will of course have to be developed in stages — office space, housing, clinics and kindergartens.
The experience of IT centers in India (Bangalore) and Belarus (the High Technologies Park) makes it possible to conclude that implementing a similar project in Kazakhstan would have a multiplier effect on the development of our country’s economy.
Earlier, President of Kazakhstan Kassym-Jomart Tokayev instructed that the most frequently requested certificates and paper confirmations be abolished by the end of the year and that information be confirmed digitally. According to him, there is already positive experience with address, property and other similar certificates