INTERNATIONAL ICT PLAYERS

Kazakhstan 2017 | TELECOMS & IT | B2B

For a country that's yet to be fully penetrated by some ICT solutions, the opportunities for outsourcing, technology, and knowledge-based transfers are huge.

Sergey Chernovolenko
SERGEY CHERNOVOLENKO
General Manager
Xerox Eurasia
Ben Yoon
BEN YOON
President
Samsung Kazakhstan

What are some of your most recent plans for working across Central Asia?

Sergey Chernovolenko Xerox has been operating in Central Asia for more than 25 years with companies and organizations from most industries in the region. Our Almaty-based office is responsible for the business operations in Kazakhstan and four other Central Asian republics—Turkmenistan, Tajikistan, Uzbekistan, and Kyrgyzstan, plus Mongolia. In these markets, we offer the major products and services that Xerox provides around the world (apart from specific business process outsourcing services), which brings efficiency and productivity to document-based business processes and helps our customers optimize their document flow. We are still considering providing business process outsourcing services in case we see a demand for these types of projects on the market.

Ben Yoon 2016 was a challenging year for Kazakhstan's economy, which was affected by unstable oil prices in the global market and a weakened tenge. Those issues had a significant impact on the market. Like many other market players, we are a global company. We import products produced all over the world. The lack of stability of the local currency has definitely affected pricing policies in the consumer electronics market as well other business sectors. 2016 has been tough, but I believe we have managed to overcome difficulties and showed solid market performance. We maintained our undisputed leadership in the market across major product categories, including mobile devices. Furthermore, we have increased our market share in the TV segment, widening the gap with other market players in Kazakhstan. We also launched new innovative products such as refrigerators and washing machines last year. These product groups are considered less “thrilling" from an innovation standpoint, however we have managed to bring new features to wow consumers. We have launched a washing machine line-up with AddWash technology. Essentially we have introduced an additional door that can be opened at any time during the cycle for adding additional clothing items. So, through our market leadership and product innovation we have managed relatively well in 2016.

What would you define as the main features of the Kazakhstani market in particular?

SC Throughout my career at Xerox I have worked in different countries and generally cannot outline many differences in the business climate. Most of the companies work in the same way as they have one common business goal: generate revenue and profit. Most of the issues they face are very similar: low productivity and efficiency and a lack of innovation, which can possibly directly benefit revenue and profit. The only big differences concern the economic and political environment and the level of technological development. It is a quite interesting and challenging time in Kazakhstan. In terms of the business environment, the difference is the level of technical and business outsourcing. In most of the places I have worked, like Turkey and some countries in Central and Eastern Europe, there was a high demand for technology outsourcing even 10 years ago, and it was a standard part of being successful in most industries. Outsourcing is new to Kazakhstan and the demand was accelerated by a challenging economic situation. Another point is the cost of capital. When we outsource, companies' links and access to capital in a cost-effective manner is a critical point as outsourcing requires investment and sometimes investment is on the horizon for two to four years. In this case the government needs to continue to make progress here and decrease the cost of capital, especially if Kazakhstan wants to compare itself to Turkey. Companies' profit margins in Kazakhstan do not necessarily justify going with more expensive investments; an investment of two to three years is quite a long period of time. Perhaps these are two big differences; the first is access to cash and its cost while the second is the level of outsourcing integration and readiness to invest. People in Kazakhstan are hardworking and open to innovations.

BY Kazakhstani consumers are sophisticated and receptive of new technologies. I have noticed a lot of premium cars on the roads; the ones you can hardly spot in South Korea or European countries, where smaller cars dominate the roads. The situation is similar in the terms of the mobile market. Kazakhstani consumers want new devices from established brands. They are looking for superior design, quality, and functionality. For example, local consumers prefer high-end models with larger screens, while their Western counterparts tend to lean to smaller 3-4 inch screen phones. The situation in the TV market shows similar trends. Many consumers across the globe still purchase TVs of 32 inches and smaller, while Kazakhstani TV viewers prefer to watch their favorite shows on 40-inch screens and higher. While Kazakhstan is not immediately perceived as the largest market in terms of size, it holds great potential for our business in terms of our brand's performance in the premium segment.