It is a good time to be a data scientist. From technology companies to private equity firms, everyone is on the hunt for tech-savvy individuals who can make sense of troves of data and turn them into a competitive advantage.
As data becomes increasingly important for private equity firms and their portfolio companies, managers have been ramping up their hiring, from junior positions all the way to executive roles. There are now vice-presidents of engineering, heads of product and chief data officers.
“I think there is just demand for technology talent across the whole recruitment ecosystem at the moment,” says Jack Denison, divisional head of executive hires at La Fosse Associates, an executive search firm for technology talent.
“And the demand for talent is not just at executive level; it goes all the way to middle management and technical hires. It’s important to have the right tech leader in [place], but without the individuals to deliver the strategy, you can have the best plans, but executing them will be challenging.”
A quick look through job postings is enough to see the rise in demand – and it is not just the largest firms that are searching. In March, for example, US-based lower mid-market firm TZP Group hired Tamar Shapiro as partner of data and analytics in its portfolio operations group. Shapiro, who was brought in to help portfolio companies leverage their data and analytics to drive engagement and profitability, joined from social media platform Instagram.
“Without the individuals to deliver the strategy, you can have the best plans, but executing them will be challenging”
Jack Denison, La Fosse Associates
Even Amazon Web Services has created a dedicated private equity solutions architecture team, which helps private equity firms and their portfolio companies use artificial intelligence and machine learning. Meanwhile, Blackstone has an established data science team that uses advanced analytics and statistical methods to improve how the company invests and operates.
But to attract the best talent, private equity firms need to adjust their expectations, Denison points out. Some of the best chief technology officers are in their 30s, and buyout groups have had to accept that they will have had a shorter tenure in their previous roles.
There is a particular need for individuals with deep tech and product backgrounds, says Denison.
“If they were in engineering or software development and have then gone into a commercial role, they can demonstrate they can operate strategically… If you have individuals like that within your funds and portfolio businesses, you’re lucky to have them because they’re highly sought after.”
That is why long-term incentives, such as equity, are so important in attracting such talent. Denison says he is seeing equity slices getting bigger and bigger for tech and data executives, and sometimes even being offered to individuals one below the executive level, because they are so crucial to delivering business strategies.
He has also seen substantial wage and base salary increases, especially in the last 18 months. Denison says: “Everyone wants [tech talent]. They are so in demand and will consistently be in demand going forward. The bit that private equity offers is carry and diversity of the work. If you’re hiring people directly into funds, where we’ve seen that succeed before, especially in the mid-cap, it’s because of the diversity of businesses they get to work on.
“That’s combined on the internal side with the potential of carry. It’s something that’s very much unique to PE and has huge potential upside. PE [firms] have deep pockets, but very rarely do tech data product leaders decide to join PE [firms] because of the base salary – it’s the long-term incentive of the carry.” If PE firms do not offer carry they will struggle, he adds, because such talent can have their pick of which companies to join.
Demand from limited partners
It is not just general partners that are realising the importance of having tech-savvy talent on their teams, according to Gail McManus, managing director and founder of recruitment firm PER. “Some of the first organisations that have taken this on board are some of the larger limited partners, or organisations that want to look through the funds they invest in down to the underlying portfolios.”
Indeed, Singaporean sovereign wealth fund GIC is currently advertising for a number of roles in data and technology, ranging from VP of data loss prevention to lead platform engineer for enterprise automation.
What has changed in recent years, according to McManus, is also where the data and technology people sit within an organisation. They can be part of the investment team, the portfolio management team or the risk management team.
And where can firms look for these skills? “It’s not the traditional investment banks – they will be looking for people from data-heavy organisations, places like Bloomberg. It could be from larger asset managers on the public equities side,” McManus says.
For La Fosse’s Denison, it has been interesting to see the rise of new technology-focused board positions. As their value to businesses becomes greater and greater, he says they are sometimes seeing as many as three tech-focused positions on the board – a chief technology officer, a product officer and a chief data officer.
Financial services, in particular private equity, has a lot of progress to make in terms of diversity, and the search for tech-savvy talent has the potential to impact that progress.
Women are underpaid and underrepresented in tech; according to the Pew Research Center, women make up only 25 percent of computer science-related jobs and just 14 percent of the engineering workforce. Per data from tech-focused job marketplace Hired, men were offered higher salaries than women for the same job title at the same company 59 percent of the time in 2020.
To address this problem, La Fosse Associates has launched a coding school called futureproof. Students, who have either finished university or want to change careers, can attend courses for free to become software developers and engineers. They come from majority lower-income backgrounds and there is typically a 50:50 gender split, Denison says.
“We’re not doing it as a charity, we launched it because the demand is so great from our clients for diverse tech talent, especially at junior level,” Denison says.