Organic growth is back on the radar of IT outsou­rcing services providers. Am­­­ong their top priorities are aggressive marketing, in­ve­stments in new delivery channels such as cloud and new client wins, say industry experts.

“Over the past year and a half, we were focusing on ‘digging deep’ into our existing client relationships. This was primarily to improve bo­ttom line,” said Babuji Abr­aham, senior vice-pre­sident and head of people function, MindTree. However, top line growth is now back as the main focus of the firm now. New delivery platforms such as cloud and pay-per-use models are adding to growth prospects, he added.

Muted volume growth over the first two quarters of this calendar year were not only due to poor external co­nditions but also because of optimisation strategies that firms took up to improve profit margins. The quarter ended June showed regained growth in volumes. IT players have also started spending more on sales and marketing to attract more clients to their services.

“It is clear that providers are optimistic despite cons­iderable uncertainty in the global economies,” said Bry­an Britz, research director at Gartner. “Many ITO provid­ers are intending to commit serious marketing funds and target new accounts to outgrow the market. Our su­rvey (on growth prospects of IT players) found that at le­ast 50 per cent of them wo­uld be spending 2 per cent to 5 per cent of revenue on marketing in 2011, which is higher than the historical norm of about 1 per cent to 3 per cent,” Britz said.

At the same time, ITO providers continue to invest significantly more in sales than marketing as demons­trated by two-thirds of prov­iders indicating sales expe­nses are greater than 6 per cent of revenue. With grow­th on the agenda, ITO pro­v­iders will prioritise the purs­uit of new clients. Forty-fi­ve per cent of all ITO provi­ders indicated that winning new clients is the top priority for 2011, Britz added.

However, the service pro­viders also recognise that the bulk of this year's actual revenue growth will continue to come from existing accounts. Overall, between 66 per cent and 70 per cent of expected growth in 2011 will be generated by existing clients, he observed.

According to Infosys’ annual report for last financial year, the firm incurred selling and marketing expenses at 4.8 per cent of total reve­nues compared with 4.6 per cent in the previous year. Selling and marketing expe­nses primarily consists of employee costs, which incl­ude bonus payment. All oth­er costs excluding the empl­oyee cost were 1 per cent of revenue during the year. The firm along with its subs­idi­aries added 139 new cu­st­omers as compared with 141 during the previous year.

In the case of Cognizant, the company made gross addition of 76 new customers and closed the June quarter with 721 active customers. During the quarter, the nu­mber of strategic accounts increased by six. “This brin­gs our total nu­mber of strat­egic clients to 179. The momentum is expected to continue,” said Gordon Coburn, chief financial and operating officer of the company.

For the first quarter of this financial year TCS witnessed qualitative improvement with client additions of the higher side of the revenue brackets, said Pankaj Kapoor, analyst at Standard Chartered Equity Research.