Who are The Big 4? Why do people call them that? And which one of them is the best to work in?
The Big 4 consulting firms are Deloitte, EY, PWC and KPMG. They’re grouped together because they’re similar in size and are generally equally able to provide a wide array of business services including audit, assurance, taxation, management consulting, actuarial, corporate finance, and legal services.
They’re essentially accounting firms, but they provide a lot of other services too, including strategy consulting. In terms of consulting, the Big 4 are the biggest firms, but not the most prestigious.
Inside The Big 4, it isn’t always obvious which team is responsible for consulting. Their strategy consulting arms are often called something slightly strange. For example, in most countries, Deloitte’s is named “Strategy and Operations”. Similarly, their other financial services are often called “[…] Consulting”, even though they really aren’t consulting. Deloitte has a Tax Consulting division, for example, which is really just a tax advisory service to big business.
In addition, be careful not to confuse Big 4 Consulting with their subsidiaries. In the last ten years, they have all bought out smaller strategy boutiques. PWC bought Strategy& (Booz Allen Hamilton) and Deloitte bought Deloitte Monitor. These smaller subsidiaries are generally deemed to be more prestigious in the consulting world. They align much more closely with MBB in their style and in the types of projects they engage with. For all intents and purposes, the work they carry out and their leadership structures are completely separate.
In this sense, the Big 4 are hybrids. They are the results of what was left after the 80s in which there was a big series of mergers. Deloitte, for example, is really called Deloitte Touche Tohmatsu Limited; a result of a merger of all these firms that took place over the course of the 20th century.
This makes them very different to MBB or the “Big 3” which have very different histories characterized by visionary founders and a tight focus on what their service will be. The Big 4 offer a much wider scope of services and traditionally do longer projects, bringing in more different sub-teams. For example, a project to advise on a merger, might include IT teams, Strategy teams and a Tax team to optimise their synergies.
How are the Big 4 Different?
Along with Accenture, the Big 4 approach strategy problems in different ways to other consultancies, especially the strategy houses like Roland Berger, OC&C etc. They also typically approach strategy and operations much more in partnership than as separate arms of a business.
Here are the essential differences:
- The Big 4 do more implementation, whereas MBB place more emphasis on the strategy/ ideational phase.
- The Big 4 currently have better equipped technology and IT teams. They spend a lot of time integrating digital services and doing software work. The Big 4 have access to way more specialists in a range of financial services roles. They can therefore integrate tax or assurance roles with a consultancy project very easily.
- The big 4 take on different clients. McKinsey’s clients are higher profile, but they work on a smaller % of the firm. Deloitte or Accenture are more likely to work on the entire firm, with their larger personnel resources.
- The projects are different. As the previous point shows, working at the Big 4 includes more doing than thinking. They employ lots and lots of analysts in huge project teams as opposed to MBB’s streamlined approach.
As you can imagine, this approach does not suit everyone. Lots of people leave after two or three years. Either they move on to a different exit opportunity or they move to another strategy consultancy. It is more common to move from Big 4 to another consultancy than it is between other consultancies due to this big culture difference; lots of people find that it just isn’t for them.
In figuring out which firm has been the leader in recent times it is important to look at their revenues. They all operate a similarly high personnel: fee ratio and so these figures are directly comparable.
Here is how Sam Ovens of Consulting.com breaks down their revenues.
Deloitte: $38.8 Billion
- $14.4 Billion Consulting & Advisory
- $14.1 Billion Audit/Assurance/AERS
- $7.4 Billion Tax
- $3.5 Billion Other Professional Services
PwC: $37.68 Billion
- $15.97 Billion Audit/Assurance/AERS
- $12.25 Billion Consulting and Advisory
- $9.46 Billion Tax
Ernst & Young: $31.4 Billion
- $11.63 Billion Audit/Assurance/AERS
- $8.53 Billion Consulting & Advisory
- $8.18 Billion Tax
- $3.07 Billion Other Professional Services
KPMG: $26.4 Billion
- $10.39 Billion in Audit/Assurance/AERS
- $10.18 Billion Consulting & Advisory
- $5.83 Billion Tax
Which is the Best?
The consulting pecking order for the Big 4 changes year on year and differs immensely between offices. KPMG always used to be the leader, but are now at the back of the pack. In the US, Deloitte is streaking out ahead in consulting terms, even competing for business with McKinsey, Bain and BCG at times. Sometimes they are even referenced as MBBD. PWC is probably the leader in the UK, although it doesn’t come anywhere near MBB.
For all of them, salaries will be significantly smaller than more conventional strategy houses. In general, very few people would put a job offer from the Big 4 over another top ten strategy consultancy. In some countries however, Big 4 Consulting offers some of the best, if not THE BEST consulting opportunities. In others, it is looked down upon in prestige and salary terms.
Finally, as you might have noticed, doing both accounting and consulting creates a bit of a conflict of interest. Indeed, the Big 4 firms wouldn’t provide accounting services to the same firm to which they provide consulting, tax advisory, assurance or any other service. Indeed, 497 of 500 SNP companies are audited by the Big 4 so this cuts out a lot of potential business!