Kazakhstan's Technology Economy After the Russian Shock

Kazakhstan's digital economy, the Russian shock, and the case for a deeper EU partnership

Executive summary

• Kazakhstan’s IT services market reached 2.9 trillion tenge, or approximately $5.6 billion, in 2025, representing a nominal increase of 70 per cent in one year. Yet 86.7 per cent of these services were purchased by domestic clients, showing that the sector’s recent expansion is now driven primarily by Kazakhstan’s own digital transformation rather than by Russian relocation alone.

• Russia’s full-scale invasion of Ukraine nevertheless acted as a powerful catalyst. Between 2021 and October 2023, the number of companies with Russian participation in Kazakhstan increased from 7,929 to 18,927, while the number operating in information and communications technology rose almost fivefold. This accelerated the transfer of skills, firms, capital and commercial networks into Kazakhstan.

• Kazakhstan has not necessarily outperformed every regional competitor. Armenia and Georgia absorbed a larger technology migration shock relative to their populations, Uzbekistan is emerging as a serious competitor in IT outsourcing and service exports, and Kyrgyzstan has developed a smaller but highly export-oriented ecosystem. Kazakhstan’s distinctive advantage lies instead in the combination of a larger domestic market, advanced financial services, state-backed digitalisation and greater capacity to finance physical infrastructure.

• The European Union has a strategic opportunity to help turn Kazakhstan’s temporary post-2022 advantage into durable economic diversification. EU–Kazakhstan trade reached €41.4 billion in 2025, but 92 per cent of European imports from the country still consisted of mineral products. A more balanced partnership should therefore extend beyond oil, uranium and critical minerals towards broadband, data infrastructure, cybersecurity, digital skills, research and sanctions-compliant technology trade.

A boom that requires explanation

Kazakhstan’s IT services sector recorded extraordinary headline growth in 2025. The value of services produced exceeded 2.9 trillion tenge, equivalent to approximately $5.6 billion. This was 70 per cent higher than in 2024 and 4.6 times the value recorded when the current statistical series began in 2021. Exports reached $753 million according to Kazakhstan’s Bureau of National Statistics, while the National Bank, using balance-of-payments data and a broader statistical perimeter, estimated IT service exports at $1.142 billion.

The scale of the increase immediately raises a geopolitical question. To what extent is Kazakhstan’s technology expansion a product of Russia’s full-scale invasion of Ukraine and the subsequent relocation of Russian companies and workers?

The answer is that the war mattered greatly, but mostly as a catalyst.

The arrival of Russian specialists expanded Kazakhstan’s supply of skilled labour, created new companies and connected the country to international professional networks. Western sanctions and the withdrawal of international businesses from Russia also redirected commercial and financial flows through neighbouring economies.

Yet the 2025 figures tell a more complex story. Domestic customers accounted for 86.7 per cent of the Kazakh IT services market. Sales to local clients rose by 76.7 per cent, including a 49.5 per cent increase in services sold to businesses and a more than sixfold increase in demand from individual consumers. Exports grew more slowly, by 28.9 per cent, and represented only 13.3 per cent of the total market.

Kazakhstan’s current IT expansion is therefore no longer mainly an external relocation story. It increasingly reflects the digitalisation of the country’s banks, companies, public administration, retail platforms and households.

The war opened a window of opportunity. Kazakhstan’s domestic economic structure determined whether it could exploit it.

A necessary statistical caution

The reported 70 per cent increase should not be interpreted as a 70 per cent rise in real technological output, employment or productivity.

The figure measures the nominal value of IT services produced in current tenge. It therefore includes price increases, inflation, exchange-rate effects and potentially changes in statistical coverage. A company charging more for the same service increases the market’s nominal value without necessarily producing more software or employing more engineers.

The most meaningful indicators are consequently not the headline growth rate alone, but the changing composition of demand, the increase in exports, the creation of qualified employment and the expansion of companies capable of selling proprietary products abroad.

This distinction is important for evaluating whether Kazakhstan is undergoing genuine structural transformation or experiencing a temporary inflation in the monetary value of digital transactions.

The transformation since 2022

The pre-war foundation

Kazakhstan did not begin its digital transformation in February 2022.

Before the invasion of Ukraine, the country had already developed a relatively advanced digital banking system, widespread mobile payments, electronic public services and the Astana Hub technology ecosystem. Established in 2018, Astana Hub offered tax incentives, simplified administrative procedures, startup support and assistance with international expansion.

The domestic market was still modest compared with its later size, but the institutional foundations were already present. This distinguishes Kazakhstan from economies in which Russian relocation produced growth without an existing national technology strategy.

The country’s external economic structure, however, remained highly dependent on natural resources. In 2021, EU–Kazakhstan goods trade totalled €23 billion. European imports from Kazakhstan amounted to €17.5 billion, while European exports reached €5.5 billion. The relationship largely followed a traditional pattern in which Kazakhstan exported fuels and raw materials and imported machinery, pharmaceuticals, chemicals and manufactured products.

2022 and the first relocation shock

Russia’s invasion of Ukraine initiated two major waves of emigration. The first followed the beginning of the war and the imposition of Western sanctions. The second followed Russia’s mobilisation announcement in September 2022.

More than one million Russians are estimated to have left their country during the first two years of the war. Many moved to the Caucasus and Central Asia because of geographical proximity, widespread use of the Russian language and relatively limited migration restrictions. Approximately 500,000 bank accounts were opened in Kazakhstan by Russian visitors and migrants after the invasion.

Kazakhstan was attractive for several reasons. Russian citizens could operate in a familiar linguistic and commercial environment, access international payment systems and establish local companies without moving to a distant jurisdiction. Businesses could relocate staff while retaining access to Russian clients, suppliers and professional networks.

This generated three simultaneous economic effects.

First, Kazakhstan received an immediate injection of human capital. Software developers, engineers, product managers, entrepreneurs and financial professionals arrived much faster than equivalent local specialists could have been trained.

Second, the migrants created additional domestic demand. They opened bank accounts, rented housing, purchased telecommunications services, used digital platforms and paid for professional and administrative services.

Third, Russian and international companies established Kazakh legal entities that could continue interacting with foreign suppliers and payment systems.

The commercial relationship with Europe also changed dramatically. EU goods exports to Kazakhstan rose from €5.5 billion in 2021 to €10.4 billion in 2022, an increase of 88.8 per cent. European imports from Kazakhstan increased from €17.5 billion to €29.9 billion, largely because of higher energy prices. Total trade consequently rose from €23 billion to €40.2 billion in a single year.

This increase did not in itself prove sanctions evasion. It reflected energy prices, post-pandemic investment, changing supply chains and new Kazakh demand as well as possible re-export activity. Nevertheless, the sudden rise in trade placed Kazakhstan under greater scrutiny from Western governments.

2023 and the institutionalisation of relocation

By 2023, the relocation effect had become visible in business registration data.

The number of companies with Russian participation in Kazakhstan reached 18,927 by October 2023, compared with 7,929 in 2021. Information and communications technology recorded the strongest sectoral increase, with the number of Russian-participation entities rising almost fivefold.

This was not merely a matter of Russian-owned companies replacing Kazakh firms. The inflow also expanded the pool of employees, subcontractors, consultants and potential founders available to local companies.

Knowledge transfer is particularly important in technology industries because expertise is often transmitted through teams, professional networks and repeated project experience rather than through formal education alone. A relocated senior developer or product manager may help train junior Kazakh employees, introduce international working practices and connect a company to clients outside the region.

The benefits were not guaranteed to last. Some Russian migrants subsequently returned home or moved to other jurisdictions. However, companies, professional relationships and locally trained employees can remain even after the original migrants leave. The European Bank for Reconstruction and Development therefore concluded that the migration shock could generate longer-term gains when combined with policies supporting entrepreneurship, cross-border business and ICT development.

EU–Kazakhstan trade continued to rise in 2023, reaching €42.4 billion. European exports to Kazakhstan increased to €12.2 billion, more than twice their 2021 value.

2024 and the transition from migration to infrastructure

By 2024, Kazakhstan faced a strategic choice.

It could treat the inflow of Russian businesses and workers as a temporary source of consumption and tax revenue. Alternatively, it could use the relocation shock to support a broader transformation of its economy.

The government increasingly chose the second approach. Astana Hub expanded its role, state-backed startup and export programmes grew, and the government placed greater emphasis on digital infrastructure and artificial intelligence.

International financial institutions also began supporting this transformation. In February 2024, the World Bank approved $92.43 million for Kazakhstan’s Digital Acceleration for an Inclusive Economy project. Together with commercial financing, the project has a total value of approximately $128.7 million and is intended to extend climate-resilient broadband to underserved regions and more than one million rural residents.

The project illustrates both Kazakhstan’s potential and its structural weaknesses. Around 1,400 villages were identified as lacking broadband coverage, while private telecommunications companies had insufficient commercial incentives to invest in some sparsely populated areas. The initial programme focuses on underserved areas in Akmola, Turkistan, West Kazakhstan and East Kazakhstan.

The national technology boom therefore coexists with a substantial internal digital divide.

In the same year, EU–Kazakhstan goods trade reached a record €46.4 billion. Yet European imports remained overwhelmingly concentrated in energy and mineral products, showing that the digital transformation had not yet fundamentally changed Kazakhstan’s external economic structure.

2025 and the rise of domestic demand

The composition of the 2025 IT market marks a significant change.

Domestic clients purchased more than 2.5 trillion tenge in IT services, compared with 391.6 billion tenge sold to foreign customers. Almaty and Astana alone accounted for 92.2 per cent of national production. Almaty generated approximately 1.8 trillion tenge in services, while Astana generated 883.8 billion.

These figures show that Kazakhstan is developing a powerful urban digital economy but not yet a balanced national one.

The growth of domestic demand reflects the spread of digital banking, data processing, cloud services, online platforms, government digitalisation and business software. It also suggests that Russian migration can no longer be treated as the main explanatory factor. Migration primarily increased the supply of skills and businesses. The subsequent expansion was sustained by Kazakh customers.

Exports nevertheless continued to develop. The Bureau of National Statistics estimated them at $753 million, while the National Bank placed them at $1.142 billion. Astana Hub residents accounted for $633 million of the National Bank figure, with 537 resident companies selling to foreign markets.

The difference between the two national export estimates arises from distinct methodologies and statistical perimeters. It does not invalidate the upward trend, but greater transparency would improve the credibility of Kazakhstan’s technology narrative.

2026 and the European opening

By 2026, Kazakhstan’s post-war positioning had developed into a broader diplomatic and investment strategy.

At the June 2026 EU–Kazakhstan leaders’ meeting in Brussels, the two sides committed to deepen cooperation in critical raw materials, renewable hydrogen, energy, transport connectivity, research and innovation. The European Investment Bank supported a €150 million transport-connectivity agreement, while the European Bank for Reconstruction and Development signed a memorandum related to an internationally accredited chemical and analytical laboratory in Kazakhstan.

The partnership nevertheless remains heavily centred on commodities, transport and industrial infrastructure. Digital infrastructure and IT services occupy a less prominent place than oil, uranium, critical minerals and physical connectivity.

This represents a missed opportunity.

The European Commission’s own trade data show that the EU was responsible for 42.1 per cent of Kazakhstan’s total goods trade and received 57.3 per cent of its exports in 2025. Yet mineral products constituted 92 per cent of European imports from Kazakhstan. Meanwhile, machinery, appliances and transport equipment represented almost half of EU exports to the country.

Europe is therefore already central to Kazakhstan’s economic modernisation, but the relationship remains based on a familiar division of labour. Kazakhstan supplies resources, while Europe supplies equipment and technology.

A deeper digital partnership could begin to change this structure.

Kazakhstan in regional perspective

Direct comparisons between national technology sectors require caution. Countries use different statistical categories for telecommunications, software, BPO, digital platforms and information services. Market size, export revenues and technology-park turnover are not interchangeable.

The regional evidence nonetheless shows that Kazakhstan is not the only country to have benefited from the post-2022 relocation of Russian talent and business.

Armenia and Georgia absorbed a stronger talent shock

Relative to their populations, Armenia and Georgia experienced a more intense immediate relocation effect than Kazakhstan.

The number of Russian migrants entering Armenia in 2022 may have been equivalent to as much as 2.5 per cent of the country’s population. Employment in Armenia’s ICT sector almost doubled during that year. Georgia received more than 20,000 Russian technology professionals, while Russian migrants registered 21,326 legal entities between the start of the war and July 2023.

ICT activity in both countries rose rapidly after the invasion. According to the EBRD’s sectoral index, the increase was particularly strong in Armenia and Georgia, where migration represented a much larger shock relative to the size of their labour markets.

Their experience differs from Kazakhstan’s in several respects.

Armenia already had an established engineering and software tradition, supported by its global diaspora and links to US technology companies. Russian arrivals reinforced an existing export-oriented ecosystem.

Georgia offered relatively easy entry, company registration and access to foreign payment systems. It became an attractive base for independent specialists and small technology firms serving international clients.

Kazakhstan received a larger absolute number of Russian-linked firms, but the shock was diluted by its greater economic size and population. Its comparative advantage is consequently not the intensity of migration alone. It is its capacity to combine relocated expertise with a larger domestic market, major banks, public digital platforms and greater infrastructure spending.

Uzbekistan is the strongest Central Asian challenger

Uzbekistan increasingly represents Kazakhstan’s most significant regional competitor in IT services.

Uzbekistan reported approximately $940 million in IT service exports in 2025, approaching Kazakhstan’s National Bank estimate of $1.142 billion. During the first seven months of 2025, IT Park Uzbekistan admitted 481 new export-oriented companies, including 232 with foreign participation. Its resident companies exported to more than 90 countries, with North America accounting for 45 per cent of their geographical distribution.

The Uzbek model is more explicitly oriented towards exports, outsourcing and business-process services. It relies on a large and relatively young labour force, lower operating costs and active efforts to attract foreign companies.

Kazakhstan’s model is more domestically anchored. It benefits from higher purchasing power, a more developed banking sector and greater demand for sophisticated corporate and consumer services. Uzbekistan may have stronger potential in labour-intensive outsourcing, while Kazakhstan is better positioned in fintech, digital public services, enterprise technology and capital-intensive digital infrastructure.

Kazakhstan therefore leads in some dimensions but not in all. Its export advantage over Uzbekistan is already narrow and depends partly on which statistical measure is used.

Kyrgyzstan demonstrates export intensity

Kyrgyzstan’s technology sector is much smaller, but it is highly outward-looking.

The country’s High Technology Park had 477 resident companies and 2,859 employees in 2024. Its earnings reached $130.3 million, of which 94 per cent came from exports. Kyrgyz software and technology services were sold to more than 60 markets, with the United States accounting for nearly 40 per cent of exports.

This model benefits from low operating costs and a preferential tax regime, but it lacks Kazakhstan’s domestic demand, financial depth and capacity to fund major data and connectivity infrastructure.

Kyrgyzstan’s experience nevertheless highlights an important weakness in the Kazakh model. A large internal market can sustain growth, but it can also reduce the pressure on companies to become globally competitive.

Kazakhstan performs differently rather than uniformly better

The regional comparison leads to a more nuanced conclusion.

Armenia and Georgia captured the strongest immediate technology migration shock relative to their size. Uzbekistan is building the region’s most credible volume-based outsourcing competitor. Kyrgyzstan has created a small but intensely export-oriented sector.

Kazakhstan’s distinctive strength lies in converting a geopolitical shock into a broader domestic digital economy.

Its main advantage is not simply the number of Russian workers or companies it attracted. It is the presence of customers capable of purchasing digital services, banks capable of financing them, public authorities willing to support infrastructure and a government seeking to incorporate technology into its wider diversification strategy.

Its weakness is that a domestically driven boom can remain concentrated, protected and insufficiently innovative. The critical question is whether Kazakh companies can progress from implementing and reselling technology towards creating intellectual property and scalable products of their own.

Sanctions risk and the limits of intermediary status

Kazakhstan occupies an increasingly sensitive position between Russia and Western economies.

It is a member of the Eurasian Economic Union, shares a long land border with Russia and remains deeply connected to Russian supply chains. At the same time, it seeks closer economic relations with the European Union, the United States, China, Türkiye and the Gulf economies.

This multivector position creates opportunity, but it also exposes Kazakhstan to sanctions and export-control risk.

Trade growth does not prove circumvention

The near doubling of European exports to Kazakhstan between 2021 and 2022 attracted attention because it coincided with the introduction of broad restrictions on exports to Russia.

However, trade growth alone cannot establish sanctions evasion. Kazakhstan needed additional machinery, pharmaceuticals, transport equipment and industrial products for its own economy. Higher energy revenues also increased its capacity to import.

The risk arises when the structure of trade, corporate ownership and final destinations indicate that goods nominally imported into Kazakhstan are ultimately transferred to sanctioned Russian entities.

Technology products are particularly sensitive because semiconductors, machine tools, telecommunications equipment and electronic components can have both civilian and military applications.

Kazakhstan-based entities have already been sanctioned

Several concrete cases demonstrate that this is not a hypothetical concern.

In June 2024, the US Treasury designated Kazakhstan-based KBR Tekhnologii TOO. According to the Treasury, the company made hundreds of shipments to Fabcenter and entities associated with Russia’s sanctioned Ostec Group. The goods included machinery and equipment connected to semiconductor production, soldering and welding. The company had been established between May and August 2022, during the first wave of post-invasion business relocation.

In October 2024, the US Treasury designated Kazstanex, another Kazakhstan-based company. US authorities alleged that Kazstanex and an Uzbekistan-based intermediary acted as nominal recipients of European machine tools before the equipment was transferred through China to Russian users.

The European Union has also expanded its use of sanctions against third-country entities. Its twentieth sanctions package, adopted in April 2026, designated 16 entities located across China, the United Arab Emirates, Uzbekistan, Kazakhstan and Belarus for supplying dual-use goods or weapons systems to Russia’s military-industrial complex. The same package activated the EU’s anti-circumvention instrument for the first time by restricting exports of certain computer numerical control machines and radios to Kyrgyzstan after identifying a high risk of re-export to Russia.

These measures carry an implicit warning for Kazakhstan. If individual designations and enhanced compliance cooperation fail to control sensitive trade, Western governments may move from targeting companies to restricting product categories, financial channels or entire sectors.

The economic cost could extend beyond sanctioned companies

Sanctions risk is not limited to the formal blocking of individual entities.

International banks may reduce their exposure to Kazakh customers if they consider transaction monitoring too costly or uncertain. Technology companies may limit access to software, cloud services, advanced computing equipment or technical support. Western investors may postpone projects if beneficial ownership or end-user information is difficult to verify.

The result could be over-compliance, in which legitimate Kazakh businesses lose access to services because international partners cannot confidently distinguish them from intermediaries serving Russia.

This would directly undermine Kazakhstan’s ambition to become an international technology hub.

Sanctions compliance should therefore not be treated as an external concession demanded by Brussels or Washington. It is part of the infrastructure required for Kazakhstan to attract credible capital and remain connected to global technology markets.

The European Commission indicated in June 2026 that progress in preventing sanctions circumvention had helped support the conclusion of negotiations with Kazakhstan. Earlier EU–Central Asia statements had also identified the prevention of re-exports of high-priority goods as an important component of the relationship.

Compliance can become a competitive advantage if Kazakhstan develops stronger customs data, beneficial-ownership transparency, end-user verification and cooperation with foreign export-control authorities.

The geopolitical significance of Kazakhstan’s digital strategy

Kazakhstan’s interest in technology is not purely economic.

The country’s geography has historically made it dependent on neighbouring powers. Oil exports rely heavily on physical pipelines and transit infrastructure, much of which passes through or is connected to Russia. Merchandise trade depends on railways, roads, customs systems and ports controlled by several jurisdictions.

Digital services do not eliminate geography. They still require fibre-optic connections, electricity, data centres, payment systems and access to global cloud infrastructure. But they are less dependent on pipelines and maritime access than oil, metals or agricultural exports.

A software product can reach a European or Asian customer without crossing several physical borders. An online service can be sold without relying on a Russian railway or Black Sea terminal.

Digitalisation can therefore support Kazakhstan’s sovereignty in three ways.

It can diversify export revenues away from hydrocarbons. It can reduce dependence on Russian transit routes. It can also build direct commercial and professional relationships with Europe, North America, the Gulf and East Asia.

This does not mean that Kazakhstan intends to disengage from Russia. Moscow will remain a major neighbour, market and security actor. Astana’s objective is more accurately understood as reducing excessive dependence by multiplying alternatives.

Technology fits the country’s multivector foreign policy precisely because it allows Kazakhstan to develop new partnerships without formally choosing one geopolitical bloc over another.

Implications for the European Union

Europe should look beyond the extractive relationship

The current EU approach towards Kazakhstan is strategically important but incomplete.

European policy focuses heavily on oil, uranium, critical raw materials, batteries, renewable hydrogen and transport connectivity. These sectors matter for Europe’s economic security and green transition. They also provide Kazakhstan with investment and alternative markets.

But a partnership focused primarily on extracting and transporting resources risks reproducing the same dependence structure that Kazakhstan seeks to escape.

In 2025, 92 per cent of EU imports from Kazakhstan consisted of mineral products, while 91.5 per cent consisted specifically of mineral fuels. By contrast, machinery and transport equipment represented 49.1 per cent of European exports to the country.

Europe purchases Kazakh resources and sells Kazakhstan the equipment needed to modernise. The next stage should involve helping Kazakhstan produce more technology, services and intellectual property itself.

This would not require abandoning cooperation in critical minerals. It would mean extending the value-chain approach used for raw materials into digital industries, research, cybersecurity and infrastructure.

Digital investment would support strategic autonomy

A stronger Kazakh technology sector would serve several European interests.

It would reduce Kazakhstan’s economic dependence on Russia and create more direct commercial links with European firms. It would provide European companies with a potential regional base for Central Asian operations. It would also increase the number of credible, non-Russian suppliers of digital, financial and industrial services in Eurasia.

There is a genuine window of opportunity. Kazakhstan has demonstrated demand for imported machinery, telecommunications equipment and advanced services. It also has an expanding domestic technology market and a government seeking international partners.

The central challenge is that the country still requires major investment in connectivity, clean and reliable electricity, cloud infrastructure, cybersecurity, education and regional development.

The World Bank broadband programme shows that the digital divide cannot be closed by market forces alone. Kazakhstan’s low population density and vast territory make rural infrastructure commercially difficult. Public and blended financing will remain necessary.

European institutions are well placed to contribute through the European Investment Bank, the EBRD, Global Gateway instruments and partnerships with private telecommunications, energy and technology companies.

Sanctions enforcement and economic engagement must advance together

The EU should avoid treating engagement and sanctions enforcement as contradictory objectives.

Excessively restrictive measures could push Kazakh businesses towards Russian or Chinese financial and technological ecosystems. Insufficient controls, however, could allow Kazakhstan to become a durable channel for sensitive exports to Russia.

The better approach is to make compliance part of economic integration.

European support could include customs digitalisation, automated risk analysis, exchange of end-user information, training for commercial banks, beneficial-ownership verification and assistance for Kazakh companies implementing European export-control standards.

This would protect sanctions integrity while reducing the risk that legitimate Kazakh companies are excluded from European finance and technology.

Policy priorities, establish an EU–Kazakhstan digital and connectivity pillar

The EU and Kazakhstan should create a dedicated digital component within their broader strategic partnership.

It should cover broadband, cloud services, cybersecurity, data-centre standards, artificial intelligence, digital public services and cross-border data governance. This component should complement, rather than remain subordinate to, cooperation on critical minerals and energy.

Mobilise blended financing for infrastructure

Public financing should be used to reduce risk in projects that private investors would not undertake alone.

Priority areas include rural broadband, international fibre connections, regional data centres, reliable low-carbon electricity and digital infrastructure outside Almaty and Astana. European financing should be conditional on transparent procurement, interoperability and adequate data-protection standards.

Link investment incentives to local capability building

Kazakhstan’s tax advantages have succeeded in attracting companies, but the next phase should place greater emphasis on what these companies leave behind.

Access to incentives could be linked to the training of Kazakh employees, cooperation with universities, local research spending, technology transfer and the creation of intellectual property registered in Kazakhstan.

The objective should not simply be to host foreign development teams. It should be to increase the number of Kazakh engineers, founders and exportable products.

Build regional technology centres beyond the two capitals

With Almaty and Astana accounting for 92.2 per cent of IT services, the current model risks reinforcing territorial inequality.

Secondary centres should be developed around universities, industrial clusters and improved broadband connections. Regional specialisation may be more effective than attempting to reproduce identical startup hubs everywhere. Western Kazakhstan could focus on energy and industrial technology, while agricultural regions could develop water-management, logistics and agritech solutions.

Treat compliance as economic infrastructure

Kazakhstan should strengthen beneficial-ownership disclosure, customs analytics, end-user controls and coordination between banks, logistics companies and export authorities.

Technology firms operating in high-risk sectors should receive clear guidance on dual-use goods and Russian counterparties. Companies demonstrating strong compliance should benefit from faster access to European financial and commercial partnerships.

Improve statistical transparency

Kazakhstan currently uses several different measures for IT exports, market turnover and Astana Hub performance.

The government should publish reconciled data explaining the differences between national business surveys, balance-of-payments statistics and technology-park reporting. It should also distinguish nominal growth from real growth and provide clearer information on employment, productivity, export destinations and locally owned intellectual property.

Credible data will be essential for institutional investors assessing whether the boom is durable.

Implications for international investors

Kazakhstan offers significant opportunities, but investors should not approach it merely as a low-cost alternative to Russia.

The strongest areas are likely to be those connected to genuine domestic demand. These include financial technology, cybersecurity, cloud and data services, electronic government, logistics technology, industrial digitalisation, mining technology, artificial intelligence applications and telecommunications infrastructure.

The domestic market provides a stronger revenue base than in smaller Caucasian and Central Asian economies. Kazakhstan also offers access to neighbouring markets and a government prepared to support strategic projects.

The risks are equally concrete.

The sector remains highly concentrated geographically. Access to advanced infrastructure and skills can vary considerably outside Almaty and Astana. Energy availability and regulatory treatment will be critical for large data-centre projects. Sanctions exposure requires enhanced due diligence on clients, suppliers, ownership and final users. Investors must also distinguish between companies generating genuine technology exports and structures established primarily for trade intermediation.

The most promising investments will be those that combine commercial demand with local capability building. Projects based solely on fiscal advantages or temporary relocation flows are less likely to produce durable value.

Conclusion

Kazakhstan has benefited considerably from the economic dislocation created by Russia’s invasion of Ukraine. The country attracted companies, skilled workers, financial flows and commercial activity that might otherwise have remained inside Russia or moved elsewhere.

But the chronology shows that the nature of the expansion has changed.

In 2022, the decisive factor was relocation. In 2023, Russian-linked businesses and professional networks became embedded in the Kazakh economy. In 2024, the emphasis began shifting towards infrastructure and ecosystem development. By 2025, domestic demand had become the principal driver of the IT services market. In 2026, Kazakhstan was seeking to convert this momentum into deeper partnerships with Europe and other international actors.

Regional comparison prevents an overly celebratory assessment. Armenia and Georgia captured a more intense influx of technology workers relative to their populations. Uzbekistan is already approaching Kazakhstan’s IT export revenues and possesses a larger labour pool for outsourcing. Kyrgyzstan has developed a smaller but much more export-intensive technology sector.

Kazakhstan does not clearly outperform all of these countries. It performs differently.

Its comparative advantage lies in the combination of domestic purchasing power, financial sophistication, public digitalisation, infrastructure capacity and geopolitical relevance. This gives it a greater chance of turning temporary relocation into economy-wide transformation.

The main risk is that Kazakhstan remains an intermediary rather than becoming an innovator — a jurisdiction through which capital, companies and technology pass without producing sufficient local knowledge or intellectual property. Sanctions circumvention would intensify this risk by discouraging Western banks, investors and technology suppliers.

For the European Union, the choice should not be between engagement and vigilance. Europe should deepen investment while helping Kazakhstan construct the compliance systems required to protect legitimate trade.

Most importantly, European policy should not limit Kazakhstan’s diversification to new mines, processing plants and transport corridors. Those investments may reduce dependence on Russia, but they will not by themselves transform the structure of the Kazakh economy.

A serious strategic partnership should also invest in the infrastructure through which future services, knowledge and technology will circulate. Broadband, clean power, data centres, cybersecurity, universities and regional innovation systems may be less immediately visible than oil pipelines or mineral deposits. They are nevertheless essential if Kazakhstan is to use the post-2022 moment to build lasting economic sovereignty.

Selected References

1. The Astana Times, “Kazakhstan’s IT Services Market Hits Record $5.6 Billion in 2025,” 10 July 2026. (The Astana Times)

2. European Commission, Directorate-General for Trade and Economic Security, European Union, Trade in Goods with Kazakhstan, 20 May 2026.

3. European Commission, “EU and Kazakhstan Strengthen Their Strategic Partnership,” 23 June 2026. (European Commission)

4. European Bank for Reconstruction and Development, Economic Boom in the Caucasus and Central Asia in a Time of Russian Immigration, April 2024. (BERD)

5. World Bank, “World Bank to Help Expand Digital Infrastructure for Underserved Areas in Kazakhstan,” 22 February 2024. (Banque mondiale)

6. U.S. Department of the Treasury, “As Russia Completes Transition to a Full War Economy, Treasury Takes Sweeping Aim at Foundational Financial Infrastructure and Access to Third-Country Support,” 12 June 2024. (U.S. Department of the Treasury)

7. U.S. Department of the Treasury, “Treasury Takes Aim at Third-Country Sanctions Evaders and Russian Producers Supporting Russia’s Military-Industrial Base,” 30 October 2024. (U.S. Department of the Treasury)

8. Council of the European Union, “Russia’s War of Aggression Against Ukraine: 20th Round of EU Sanctions,” 23 April 2026. (Consilium)

9. Ministry of Investment, Industry and Trade of Uzbekistan, “In 2025, Uzbekistan’s Exports Reached $33.4 Billion,” 7 January 2026. (O‘zbekiston Respublikasi Hukumat portali)

10. U.S. International Trade Administration, “Kyrgyz Republic – Information and Communication Technology,” 23 June 2026. (trade.gov)