Big 4 Consulting Firms [2024 Profile]
Big 4 Consulting Firms [2024 Profile]
The Big 4 consulting firms refers to the top four accounting firms with management consultancy divisions. These are Deloitte, PricewaterhouseCoopers (PwC,) Ernst &Young (EY), and KPMG. In terms of revenue, these firms are indeed the big four consulting firms. However, the term “Big 4” comes from their dominance in the accounting industry. In fact, the big 4 audits more than 80% of all U.S. public companies, not to mention their unmatched worldwide reach and reputation.
Background/History of the Big 4 Consulting Firms
For the longest time, and to date, the Big 4 have maintained dominance in the accounting market, commanding a significant collective market share. What we know today as the Big 4 are the result of a series of mergers over the years. For the best part of the 20th century, eight firms, known as the “Big 8,” dominated the accounting industry. These were Deloitte Haskins & Sells, Ernst & Whinney, Arthur Young, Touche Ross, Price Waterhouse, Coopers & Lybrand, Touche Ross, and Arthur Andersen.
These firms merged to become the “Big 5,” namely Deloitte & Touche, PricewaterhouseCoopers, Ernst & Young, KPMG, and Arthur Andersen. The Enron scandal of 2002 saw the collapse of Arthur Andersen, and its practices were split among the remaining four firms, that is, the Big 4.
While they started as accounting firms, the Big 4 firms have provided management consulting services since the 1990s. Management consulting, alongside tax and legal advisory, proved to be the biggest revenue earners for the firms, surpassing by far what revenue their auditing services brought in.
This revenue reality saw legislators mounting pressure on the Big 4 firms in the early 2000s. The pressure grew even more following the Enron scandal. Some Big 4 firms bowed to the pressure, splitting off their consulting arms.
Today, the Big 4 have regained their position in the consulting industry to become the Big 4 consultant firms globally. Except for KPMG, the firms have even acquired prestigious boutique consulting firms.
Overview of Big 4 Consulting Firms
1. Deloitte
Deloitte started out as separate companies of William Deloitte, George Touche, Charles Haskins, and Elijah Sells. The companies merged to become Deloitte & Touche, known primarily as Deloitte. Over the years, Deloitte has acquired and merged with many companies to become one of the biggest firms globally.
The firm has four main subsidiaries, each offering a wide range of employment opportunities.
- Deloitte & Touche LLP: Offers a range of audit and assurance services (both financial and regulatory assurance.)
- Deloitte Consulting LLP: Offers insights and consultancy services around core business operations, enterprise technology and performance, customer and marketing, human capital and strategy analytics.
- Deloitte Financial Advisory Services LLP: Offers risk and financial management services.
- Deloitte Tax LLP: Service offerings include integrated tax services, tax operate services, tax technology consulting, and global mobility tax.
2. PricewaterhouseCoopers (PwC)
PwC, as we know it today, was formed in 1998 following a merger between Price Waterhouse and Coopers & Lybrand. Both firms have a history of client services dating back to the mid-19th century. In 2010, the firm shortened its brand name to PwC. The firm’s headquarters are in London, UK, with a network of offices across the globe, including New York.
The firm offers a wide range of services to its diverse clientele, including:
- Management consulting
- Auditing and assurance
- Tax services
- International Financial Reporting Standard (IFRS)
- Reporting, and more.
3. Ernst & Young (EY)
Ernst & Young was formed by merging two companies, Arthur Young & Company and Ernst & Whinney, in 1989. In 2013, the firm officially adopted the brand name EY, even though it had long used it informally. The firm’s U.S. operation is headquartered in New York. The main headquarters are in London, UK and the EY operates in over 150 countries.
EY’s depth and breadth of service offerings include financial audit and assurance, consulting and advisory services, and tax services. Over the years, it has also expanded into the HR, operations, and technology markets.
4. Klynveld Peat Marwick Goerdeler (KPMG)
KPMG is a network of firms that was formed in 1987 when Klynveld Main Goerdeler and Peat Marwick International merged, along with their member firms. KPMG operates in 145 countries, with its headquarters in Amstelveen, Netherlands. KPMG-US headquarters are in New York.
The firm offers financial audit, advisory, and tax services as its three main lines of services, which are further broken into various sub-services.
Comparison Against the MBB Firms: Similarities and Differences
The MBB firms are the three largest management consultancies. These are McKinsey & Company, the Boston Consulting Group, and Bain & Company, commonly referred to as MBB.
The Big 4 are, in succinct terms, hybrids. These firms are the final result of a series of mergers dating back a long time. On the other hand, the histories of Mckinsey, Bain and BCG are marked with a clear focus on what services they will offer.
The Big 4 firms are larger in terms of revenue compared to the three largest management consultant firms. The margin in revenue between the two groups of firms is quite significant. As a matter of fact, over the years, the smallest of the Big 4 has registered more revenue than the biggest of the MBB firms.
Similarly, the Big 4 have higher employee and office locations than the MBB firms. Mckinsey, the biggest of the three, has just over 100 offices, whereas each of the Big 4 has 600+ offices across various countries in their vast global reach. In terms of employee numbers, the Big 4 consultants also outdo their management consultancy counterparts by having 5-10 times as many employees as Mckinsey, Bain and BCG.
The Big 4 firms provide a wider scope of services. Their service offerings lean more towards implementing and addressing specific accounting, taxation, legal advice, and risk assessment problems. Meanwhile, MBB projects center around advanced-level strategy consulting and providing tailored solutions in the ideation stage.
Regarding the duration of engagement for projects, the MBB firms usually work for shorter terms that last about 2-4 months. The Big 4 traditionally engage with client companies for longer, typically 6-12 months. During this time, the Big 4 consulting firms will advise, provide oversight, and help implement the solutions.
There is a difference in how the two groups use technology in customizing their service offerings and anticipating business issues. Currently, the Big 4 have the upper hand over the MBB firms as they have better-equipped and highly-skilled IT and technology teams. These teams do a lot of software work, including integrating the firms’ digital services.
Jobs at the Big 4 firms are more accessible. This is no surprise, given that the firms have a wider geographical scale and are involved in many projects. That each project also requires more involvement from various sub-teams opens up more job opportunities. McKinsey, Bain and BCG focus on strategy or ideation limits the opportunities at the firms to just consultancy roles. In addition to being highly selective, the MBB firms have a limited geographical scale, further limiting job accessibility.
The difference in compensation packages for Big 4 and MBB employees, especially the consultants, may not necessarily lie in the base salaries. However, the gap begins to widen when you consider the attractive bonuses such as sign-up and performance bonuses offered by the three largest management consultancy firms. The MBB firms also have profit-sharing plans, which increase their consultants’ take-home. Additionally, consultants at the MBB enjoy more perks, including better hotel rooms, travel, and dinners.
The work-life balance at both groups of firms is comparable. Insiders intimate that it’s better, albeit slightly, at the Big 4 consulting firms. Consultants in both groups pull about 60-80 hours a week on average, but this depends on how demanding a particular project may be.
The projects MBB firms take on demand that their consultants be more flexible and highly creative in their problem-solving approach. With each project, the consultants learn more from exposure. They also come into frequent direct contact with high-level managers and executives on the client’s side, providing opportunities to network. This isn’t to mention that McKinsey, Bain and BCG work in more functions and industries, which means more exposure for their consultants.
All this culminates in better learning and professional development, as well as more exit options when they choose to leave. The Big 4 consultants specialize early on, which limits their exit options. It’s more common for people to move from any Big 4 firms to consultant management firms outside the group of 4 than it is to move from, say, Deloitte to KPMG.
Big 4 Consulting Firms Comparative Revenue
The Big 4 earned more than $160 billion in the year 2021. Ranking by revenue in 2021, Deloitte came in first, while KPMG came in fourth.
Here is a table showing the comparative revenue for the firms over the last few years.
Name of Firm | 2021 | 2020 | 2019 | 2018 | 2017 |
Deloitte | $50.2 Billion | $47.6 Billion | $46.2 Billion | $43.2 Billion | $38.8 Billion |
PwC | $45.1 Billion | $43 Billion | $42.4 Billion | $41.3 Billion | $37.7 Billion |
Ernst &Young | $40 Billion | $37.2 Billion | $36.4 Billion | $34.8 Billion | $31.4 Billion |
KPMG | $32.1 Billion | $29.2 Billion | $29.8 Billion | $29 Billion | $26.4 Billion |
Big 4 Firms: Professional Services and Specialties
The Big 4 firms serve a diverse clientele across various industries. The Big 4 assess the specific needs of their clientele and tailor a service package with the appropriate services to meet these needs.
In addition to accounting services, these firms provide other services, earning their rank as the four largest professional services networks. These are as follows.
- Management consulting
- Audit
- Assurance
- Taxation
- Actuarial
- Corporate finance advisory
- Legal services
- Deals advisory
PwC specializes in auditing, Deloitte in consulting, KPMG in tax services, and EY in assurance and advisory services.
Big 4 Career Path Guide
Building a career in any one of the Big 4 has long been a popular choice for fresh graduates and young professionals interested in pursuing a career path in any of the services the firms offer. Every year, these firms attract interested candidates in their numbers, all looking to be the best. Working for any of the Big 4 will see you surrounded by smart people and expose you to many opportunities to gain a wealth of knowledge and build your skills while working with world-class clients.
Whether you are coming in right out of school or joining any of the Big 4 firms as a young professional, here is a guide on how you can expect your career to pan out, with some timeline estimates and an overview of responsibilities for each role. Also, read on to find out what to expect regarding working hours, salary, working with other team members, and exit opportunities.
Career Progression Within the Big 4 Consultants
To get you on the right trajectory right off the bat, apply for an internship at the Big 4 consultants while still in school. These internships last 2-3 months on average, exposing you to the job environment early. Being a former intern also gives you an edge when applying for other positions.
As a graduate, you will start as an associate. You can expect to be in this entry-level position for several years, typically three years, before progressing to the next level.
Next is the senior associate position. In this role, you will have associates working under you and will be expected to provide some coaching and mentorship to them. On the other hand, you will also be working closely with a manager. On average, you may spend around three years in this position, or less if your work is impressive before climbing up the ladder.
The manager position is the next rung in the workplace ladder at the Big 4 firms. In this position, your responsibility will be to strengthen client relationships and provide oversight to the junior staff of your team to ensure the client’s work is completed and to their satisfaction. Prove yourself, and you shouldn’t be in the manager position longer than three years before you are ready for the next step.
Above the manager level is the senior manager or director position. As a senior manager or director, you will be responsible for overseeing everything about all your accounts. This means overseeing and reviewing your team’s work and staying on top of client relationships. In this position, you will be more hands-on with the client relationship and will be expected to attend dinners, conferences, and other events as a representative of your firm.
Around five years as a senior manager is the average time it may take to progress to the managing director position. This position is usually the reserve of non-equity partners. The partner position in the Big 4 consultants is the prized and pinnacle position. Add up the years from the entry-level position, and you will realize that it may take you about 15 years to make partner at these firms.
As an equity partner, you will be responsible for so much, right from client relations and bringing in more work to billing, HR, and staffing. At the Big 4 consulting firms, there is no other position higher than partner, but you can certainly have some additional titles, such as senior partner tagged to your name.
Working Hours at Big 4 Consulting Firms
Long working hours are almost a granted at the Big 4 firms. This is especially so when you are still at the lower rungs of the workplace ladder. While it may not be great for your work-life balance, the upside is that you are gaining more knowledge and invaluable skills with these hours. Actually, what you’ll be capable of and will have mastered within, say, two years, would have otherwise taken you three years or even more to master if you worked at some other firm.
Team Effort
Teamwork is one of the greatest values for the Big 4 firms, and they attribute their success to team members collaborating and supporting each other. You will be working as a part of a team at each level. Learn and master soft skills such as communication and negotiation to ensure you thrive as part of whatever team you work with. This is important as in the early years of your career, especially at the associate and senior associate level, you will have little say over which team you will be part of.
Training and Professional Growth and Development Opportunities
Exposure to work at the Big 4 consultants will no doubt help you develop your expertise. Additionally, these firms have mentorship and training programs. Wherever you may be, you can benefit from coaching and mentoring, to help expand your knowledge base and skill set.
Big 4 Firms/Consulting Salary Packages
Big 4 consultants offer attractive salaries. As you start out in your career, remember that there may be limited opportunities for getting huge bonuses or having an annual salary review. Of course, these opportunities become more available as you make your way up the rungs.
Exit Opportunities
The exit opportunities are plentiful for anyone who’s worked with any of the Big 4 consultants. You can move from one Big 4 firm to another, move to another consultant management firm, or choose an entirely different path. The skills and experience acquired during time at the Big 4 will make one a good fit for various alternative opportunities.
Hiring/Interview Process at the Big 4 Firms
Another factor, alongside the revenue, that is the reason behind the grouping together of the Big 4 is the workforce. Each of these firms is considered highly attractive to those looking to start or otherwise advance a career in professional services.
Each of the Big 4 consulting firms has various divisions, from audit and tax to consulting, advisory and technology. Have a clear idea of where you’d like to work before applying.
The hiring and interview process is quite similar across the firms. Here is an outline of the typical process.
- Online Application: This is the first step of the recruitment process. You will have to fill in to create your profile by filling in your details and uploading your CV/resume and any other supporting documents. Carefully consider which role you are applying for, as recruiters will be looking for applications that fit the position’s criteria.
- Online Tests: The next step in the recruitment process for the Big 4 firms is online tests. These include numerical reasoning, verbal reasoning, logical reasoning, and psychometric tests. The tests can be pretty challenging, and the object is to answer the questions not only accurately, but also quickly, as the tests are timed. Psychometric tests help to give the hiring firm an idea of whether you are the right fit for both the role and the culture of the firm.
- Telephone Interviews: Telephone interviews with recruiters from the Big 4 consultants typically last 30 minutes or less. During that time, the interviewer will seek to understand your motivations for wanting to join the firm and get to know a little more about your personality and experience.
- Assessment Centers: The Big 4 Consultants have assessment centers to which you’ll be invited if you get past the telephone interview stage. Expect to complete a series of tests similar to what you did during the initial online assessments.
- Final Interviews: Depending on the role, you may go through one or several rounds of interviews for this final phase of the recruitment process. These interviews are competency-based, and you will need to showcase your strengths, making sure to back your answers. Each round is an opportunity to show why you are a great fit for the role and the firm.
The Big 4 Firms provide feedback at each stage of the recruitment and have clear timelines on when to give this feedback. The firms make it a priority to ensure you know what to expect of the candidate’s journey.
Big 4 Consultants Comparative Salaries
The consulting salaries in the Big 4 firms are identical with slight variance among the individual firms. A fact that holds across each of the Big 4 is that the salaries vary depending on the department, level, and location.
Personnel working in the consulting practice are the most highly paid, taking home up to 50% more than their peers in the other practices. Advisory services are second on the list of highest-paid practices, followed by tax services. Audit and assurance personnel come in last on the comparative pay scale. Deloitte pays the best if you want to make the most money as a consultant within the Big 4 framework. On the other hand, PwC pays the best to its auditors and tax consultants.
As expected, the pay gets better as you go higher on the various levels among all the Big 4 Firms. For partners, the compensation package is tied to their equity in the firm. Consulting salaries also vary according to location. A senior associate in New York typically earns more than their counterparts in other office locations such as Dallas and Seattle.
A Look into the Future of the Big 4 Firms
The Big 4 Consultants have been on a steady growth trajectory for years. However slow the growth may be, it is constant and continuous. In addition to the growth rates, the forecast reports from the individual firms suggest an almost guaranteed increase in revenue numbers. Mergers, acquisitions, improving overall operational efficiencies, and other strategic moves will propel the firms forward. The Big 4 consulting firms have been at the top for a long time and are expected to maintain this position for longer.
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