Interview with Qazcloud CEO Kasym Esergepov

— QazCloud entered the market in 2017. Please tell us, how has the IT market changed during this time?

— Since 2017, the Kazakh market has changed dramatically. Back then, a lot of IT departments used their own server infrastructures — racks and data centers.

The Samruk-Kazyna Fund group had questions about the number of available servers, the need to update them, as well as the status of outdated systems. In addition, technical support for large-scale IT infrastructure caused a number of difficulties. With the introduction of QazCloud on the market, the situation has changed. Today, many industrial holdings have switched to using cloud infrastructure. We are not a company that came to compete with other cloud operators that were at an early stage of development at that time. Rather, QazCloud has played a role in shaping the cloud services and information security market. Now, perhaps, our company is a reference point for other participants in this industry. This is confirmed by figures and facts.

The number of providers that entered this market only last year has grown significantly. About 20 more new cloud operators have appeared, which have begun to provide their services and actively promote them.

The emergence of QazCloud, although many consider it administrative, has actually helped to change the dynamics of the cloud computing market and reduce dependence on internal structures. This means that companies have started to mind their own business, instead of delving into specialized aspects. At that time, many large companies were actively expanding the range of internal processes — they themselves were engaged in transportation, HR services, and built server infrastructures for non-production purposes. This is not always profitable and correct, because it can blur the focus on the main activity. For example, mining companies should be engaged in ore processing and mining, and oil and gas companies should follow their profile. Highly specialized companies like ours help businesses to focus on their strategic goals.

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

“According to the research company IDC, together with Yandex Cloud, from 2017 to 2021, IT costs in Kazakhstan increased 2.4 times. In 2022, the growth rate of IT costs slowed to 7.4% compared to 2021, but demand for cloud services among local companies continued to grow — by more than 30% compared to 2021. As a result, the share of expenses on cloud services increased to 6.5% of the total expenses of companies on OT. This figure 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 — 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 area in Kazakhstan began to form quite recently — only 7 years ago. QazCloud has also contributed to the creation of generally accepted approaches to security by developing a system of tools and clearly allocating responsibilities. Our clients have control over access and administration of internal systems, while we provide 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 on the market today. We have specialized groups that are engaged in preventing cyber attacks and checking for vulnerabilities. Our specialists undergo serious training, taking into account various client systems and the specifics of their industries — from logistics to oil production, which implies different approaches to data protection and systems.

— How has the company changed during this time?

— There have been significant changes since 2017. Our company began to form on the basis of Kazakhtelecom and its data centers, as well as on the basis of their communication channels. Initially, Kazakhtelecom provided a channel part to provide communication between portfolio companies and other market players. QazCloud has created its own virtual environment. At the moment, QazCloud has its own data centers, which are the basis of their infrastructure. There is also a channel section around the city of Astana, where its own optics are located, which reduces customer costs and provides access to the clouds. We deployed several clouds, forming a triangle between Almaty, Astana and Pavlodar, using Kazakhtelecom channels and data centers. QazCloud owns a backup point in Akkol for data storage. We have introduced many new services, such as backup, Disaster Recovery. From the point of view 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 consists of about 500 people, and it is important to note that the share of administrative staff is very low — only about 7%, which is one of the best indicators on the market. We are already a large operator, and at the moment we are actively considering opportunities for expansion in the market.

— Which companies use cloud services today and are ready to outsource information security tasks?

— Information security services are primarily aimed at large corporations and holdings with vast amounts of data that attract the attention of hackers and scammers. Cloud services are used by companies of different sizes — and we strive to meet all their needs. Thus, since the beginning of last year, we have begun to expand virtualization services. To do this, we have installed the VK Cloud cloud platform and recommend it to our customers.

— What is the role of QazCloud in the development of the economy of Kazakhstan?

— We help the government to build quality standards in the market of cloud services and information security. We also help the regulator in the formation of new rules and requirements for the storage and protection of information. Our new product is the electronic store SKstore.kz — helps small and medium-sized businesses in procurement. QazCloud has debunked the myth of the Fund’s non-transparency of purchases by creating an electronic store where you can make small, similar purchases. This product has shown its effectiveness: of the 7000 suppliers on the portal, more than 60 percent are representatives of the regions, and more than half are individual entrepreneurs. Thus, the Fund has become more social, opening its purchases to ordinary residents of the country.

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

— What difficulties does the cloud computing and information security operator face today? What are the most difficult and interesting tasks?

— In our work, we often face a comparison between capital and operating costs when choosing between our own infrastructure and cloud computing. Comparisons are often made incorrectly. For example, they compare the purchase of a server with the rental of cloud resources, without taking into account that the disposal of the server can be only 10-20 percent of its declared capacity, which entails unnecessary depreciation and technical support costs. In the cloud, services are paid for using the Pay-as-you-go model, that is, customers pay only for the resources actually used.

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

The most exciting cases are the migration of huge databases, when you need to move extensive storage from one place to another. This is really a non-trivial task, especially considering the need for smooth operation of all client systems and business processes, for example, ticket sales.

We are investigating detective stories about attempts to mine and hack server infrastructures. It is exciting and responsible to counteract cyber threats that can disrupt the work of corporations. There have been many such investigations in recent years.

— What were the most important events for the company in 2022-2023?

— In 2022-2023, an electronic store was successfully launched, which received recognition from users. We also migrated the infrastructures of large companies and state-owned facilities to the cloud. In addition, we have launched the second stage of our data center in Kosshy.

— Tell us about your cooperation with VK Cloud in Kazakhstan?

— We started cooperating more than a year ago. During this time, more than 100 customers from different segments of the economy, including government agencies, retail, finance, IT, industry and other industries, have switched to the VK Cloud platform. Customers from neighboring countries have appeared. This is a very interesting project for us, as it allowed us to land in Kazakhstan a large number of IT tools that were previously unavailable locally, but are in demand everywhere. For example, VK Cloud has more than 20 pre-configured services (IaaS, PaaS), ready-to-use solutions on the button. This means that you can deploy an infrastructure or data warehouse in a few minutes, connect modern tools for developing and working with big data, and provide backup and recovery of information.

Together, we are implementing initiatives that are interesting for business. For example, in January of this year, within the framework of the startup support program, Kazakhstani teams could receive a grant of up to 10,000,000 tenge for product development or its development.

Moreover, our customers have the opportunity to scale quickly their business to other regions: they can continue to work in their cloud and develop the product in foreign markets, observing the legislation in the field of data storage. VK Cloud, by the way, is currently the only foreign vendor that has localized its platform in Kazakhstan.

— How do you see the further development of the company?

— 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 using 5G technologies and artificial intelligence to find ways to improve the experience of our customers. This requires significant resources and the transition to a more productive infrastructure, which includes the use of a different level of graphics cards and processors. We strive to be ahead of the times and meet the high standards of progress.есса.