PUNE: Mid-size IT services firm Zensar said there has been good traction in its Cloud business as clients continue to invest in digital transformation projects.Its Cloud business grew 8.5% sequentially, even as the company reported a 7% drop in revenue during the quarter.“We are seeing very good traction in the Cloud business, in the digital foundation services as well as in the hi-tech business,” chief executive Sandeep Kishore told ET.Companies are investing in virtual systems of engagement and focusing cost take-outs in sectors like retail, which have been badly hit by the Covid-19 shutdowns.This is driving new business for the company. Zensar reported new deal wins worth $150 million during the first quarter of the ongoing fiscal year, and currently has a deal pipeline of $1.5 billion. Kishore said that while there were signs of recovery in its key market North America, it would be slower in UK and Europe. The second quarter of this fiscal year will bring in more stability, he said. The company added 229 new employees during the quarter, but sequentially, the overall headcount dropped by about 500 as it did not replace the people who quit.“We went into the quarter knowing there will be softness in demand and didn’t do replacement of any attrition,” said Kishore.The company has remotely onboarded 120 freshers across five different cities so far in the month and is currently in the processes of training them virtually.