Need an algorithm to optimize grouping python dictionaries in hierarchical form

Previously I asked a question on how to group dictionaries in a list in a hierarchical structure.

Initially I wanted to group a list of dictionaries that looks like the following, using multiple keys:

[{'dept':1, 'age':10, 'name':'Sam'},
{'dept':1, 'age':12, 'name':'John'},
.
.
.
{'dept':2,'age':20, 'name':'Mary'},
{'dept':2,'age':11, 'name':'Mark'},
{'dept':2,'age':11, 'name':'Tom'}]

And the output would be:

[
    {
        2: {
            20: [
                {
                    'age': 20,
                    'dept': 2,
                    'name': 'Mary'
                }
            ]
        },
        {
            11: [
                {
                    'age': 11,
                    'dept': 2,
                    'name': 'Mark'
                },
                {
                    'age': 11,
                    'dept': 2,
                    'name': 'Tom'
                }
            ]
        }
    },
    {
        1: {
            10: [
                {
                    'age': 10,
                    'dept': 1,
                    'name': 'Sam'
                }
            ]
        },
        {
            12: [
                {
                    'age': 12,
                    'dept': 1,
                    'name': 'John'
                }
            ]
        }
    }
]

Using this code:

import itertools, operator

l = [{'dept':1, 'age':10, 'name':'Sam'},
        {'dept':1, 'age':12, 'name':'John'},
        {'dept':2,'age':20, 'name':'Mary'},
        {'dept':2,'age':11, 'name':'Mark'},
        {'dept':2,'age':11, 'name':'Tom'}]

groups = ['dept', 'age', 'name'] 

groups.reverse()
def hierachical_data(data, groups):
    g = groups[-1]
    g_list = []
    for key, items in itertools.groupby(data, operator.itemgetter(g)):
        g_list.append({key:list(items)})
    groups = groups[0:-1]
    if(len(groups) != 0):
        for e in g_list:
            for k,v in e.items():
                e[k] = hierachical_data(v, groups)

    return g_list

print hierachical_data(l, groups)

This method works fine, but now I need to optimize. The dictionaries has a big memory overhead and this grouping gets pretty slow when we are dealing with huge number of records.

I was wondering if there is any algorithm I could use to reduce the time needed to do the grouping.

P.S: I wouldn't mind changing the data-structure as long as it gives me the same hierarchical format, or any better suggestion of course.

Thanks.