The Story Behind Tech Data's Many Departures

Thomson Financial Services Inc.'s optional service unit Technical Data Inc. has watched more than 20 members of its staff, many of them analysts, walk out the door over the past two years -- and has seen the rumor mill, alleging all manner of mismanagement, whip itself into something of a froth as a result of the high level of turnover. However, most of the departed staff left to seek better employment opportunities elsewhere. Meanwhile, officials at the Boston- based outfit say that Tech Data's global employee roster has registered net growth over the past three years, and not shrinkage.

Tech Data signed a new agreement with Dow Jones Telerate in 1992, under which its foreign exchange and fixed-income data and analytic product line would be offered to Telerate's customers as an exclusive optional service (IMD, Aug. 17, 1992). In the years since the deal was inked, industry observers have repeatedly raised questions about an impending Telerate buyout of part or all of the product line, as well as about revenue thresholds that were built into the agreement -- clauses which guarantee Tech Data a minimum income from Telerate regardless of the fees the optional service generates for the larger vendor (IMD, July 6, 1993).

According to a Telerate spokesperson, the rumors persist because a few disgruntled analysts are waxing ill about their experiences at Tech Data. "We heard that two former analysts that were unhappy at Tech Data are spreading rumors," says the spokesperson. "It sounds like someone is trying to throw fire on gasoline." Among other things, sources say industry talk has it that high turnover levels at Tech Data are the result of the vendor's hiring greener staff at lower pay rates in order to maximize profit on the fixed revenues its deal with Telerate guarantees.

The Telerate spokesperson says that the deal with Tech Data has proven extremely profitable for both sides. "Tech Data provides a very successful optional service for us," says the spokesperson. He refuses, however, to comment on the specific terms of the 1992 deal. Says a Tech Data spokesperson, "Our global analysis staff has grown over the past three years with highly qualified senior market people. We are very proud of the quality of our analysts." The Tech Data spokesperson refuses to provide any information concerning head counts or turnover rates. Cameron Lochhead, general manager at Tech Data, declines to comment on exact employment figures. Edward Hutchenson, head of human resources at Tech Data did not return calls by press time.

Word that some 23 staff have departed from Tech Data has emerged following news of two higher-profile decampments. Last year, Claude Tygier removed his so-called Technical Service at Tech Data to produce a new service, called Forex Digest, for Telerate competitor Bloomberg (IMD, May 10, 1993). More recently, Tech Data president Chris Harris has been on a medical leave of absence.

Meanwhile, a wide range of interviews conducted by IMD with sources both within and outside Tech Data, reveal that the majority of those who left the vendor did so for straightforward, personal reasons. Analyst Mike Ashton now works at J.P. Morgan & Co. Analyst Ron Butman's current whereabouts could not be determined. Analyst Santiago Fittipaldi currently works in South America. Analyst Kevin Harris now works for Tech Data rival McCarthy Crisanti Maffei Inc. Fax product manager Sam Lee now works for First Boston Corp. in Hong Kong. Analyst Peter McTeague, like his colleague Keven Harris, went to MCM. Analyst Shaun Osbourne, who was a contributor to Tech Data's GFI Services' unit in Paris, departed for parts unknown. Analyst Raja Ramachandran went to India for personal reasons. Analyst Thomas Rojas left for a financial position with a South American government. Analyst Richard Segal left for parts unknown, as did analyst John Slosberg. After to going to work at Tech Data's Frankfurt office, analyst Guy Stear resigned.

Additionally, according to a suit filed in Suffolk County Court in Massachusetts, one-time FX Options product manager Joseph Taylor was dismissed. The suit, which was filed by Taylor against Tech Data in October, alleges that Taylor was "terminated without cause." In it, Taylor seeks compensation for lost pay.

Among other allegations, the filing asserts that Tech Data-parent Thomson "caused the publication of false and malicious libels concerning Taylor in an issue of FX Week," a foreign-exchange industry newsletter published by Waters Information Services, which also publishes IMD. The suit says that Thomson communicated the "libels" in order to discredit Taylor and thus justify his dismissal.

Lawyers, named parties and spokespeople on both sides of the lawsuit decline to comment on it. However, the issue of FX Week referred to in the lawsuit is most likely the Jan. 31 issue, in which an article occasioned by the debut of Tech Data's FX Options service appeared. In the article, which was also published in IMD (IMD, Jan. 31), a source commented that FX Options had been "totally revamped" before its release and following Taylor's dismissal. Taylor was replaced by David Lewis. Taylor's lawsuit is still pending.

Meanwhile, another nine Tech Data personnel, whose specific job titles could not be confirmed at press time, have also left the vendor. They are: Adam Beaudin, Nancy Cesarano, Jeremy Clark, Andrew Hicks, Andrea Johnson, Robin Kidman, Wendy Lamplough, Susan Talbot and Duncan Webster.

Sources say the fact that Tech Data has experienced some degree of turnover is not surprising -- though most agree that the levels that have come to light are high.

According to one source close to Tech Data, the optional service vendor has made it a policy to hire relatively young, inexperienced people. The source says that, in order to be competitive, Tech Data cannot offer the range of salary it takes to lure market analysts and other experienced people to produce commentary. As a rule, this source says, Tech Data maintains a handful of senior experienced analysts that teach junior people the nuts and bolts of the industry. The source says this aspect of Tech Data is well-known in the industry.

"The incentives have always been to keep the costs down while milking those products for all they are worth," says a source. "Most good people left because they wanted a career on Wall Street. I am sure that Tech didn't expect such a turnover, but that happens."

Sources say that analysts were once held in higher regard within Tech Data and were compensated reasonably well. However, they say, Tech Data started to see turnover when the company gave more influence to its sales and marketing departments. Says one source, "There aren't many reasons why talent would stick around. Tech Data has moved to a heavy sales approach. In the pecking order over there, sales is on top and analysts are somewhere at the bottom of the food chain." Other sources assert that most of those who left Tech Data left for higher pay.

Meanwhile, a group that calls itself the "New York Tech Data Alumni Club" meets regularly, one source says -- and isn't exactly exclusive. Of the informal club, the source says, it meets "every so often" and its members tend to discuss "the one or two people still" working at Tech Data who they "would like to see get a job on Wall Street."