There are few things more easily recognizable as “The Big 4” when it comes to business consulting. Among the endless amount of consulting corporations that exist today, these big four companies have earned themselves a special place in leading providers in consulting, as well as professional services.
Here, we will take a detailed look at every piece of information that you need to take a look at for these four companies. We will debunk the history of each of these firms, as well as the present services they offer, and more importantly their strategy to get to the top of the world in terms of consultation.
What is the “Big 4 Consulting”?
While the Big 4 have become key in the world of professional consultation, the term “Big 4” is actually a rip off from the world of accounting. These firms take care of a significant chunk of audits from nearly all kinds of publicly traded companies as well as large privately-held corporations.
- Ernst & Young Consulting (EY)
- Pricewaterhouse Coopers (PwC)
- Deloitte Touche Tohmatsu Limited (Deloitte)
These firms are what is left from the original 8 major companies that ruled the accounting world in the 1980s. Mergers, disbanding, and selling of Los Angeles companies caused this number to shrink to what it is today. While accounting is not at the forefront of the services offered by the big 4 companies today, they still work with it in limited amounts. The best way to classify these corporations today is to reference them as the four largest professional service networks of the modern era. These companies offer auditing services, taxation, advising, consulting, finance and legal services, and other services.
In order to get the best understanding of the Big 4, we have to take a look at the number side of things.
Big 4 Companies By The Numbers
As we covered, these four companies have absolute precedence over most other accounting companies in the professional world. As of 2017, these companies audited 99 percent of the S&P 500 companies. That is nearly all of the market share for the year.
With the takeoff of market value in consulting services in the last few decades, the Big 4 has systematically taken over the market share. These major firms now have power over less than half of the consulting market.
These top 4 have four primary sources of revenue.
- Advisory and Consultation
- Taxation Services
- Other professional operations
Surprisingly, Deloitte is the only of these 4 firms is to gather profit from the consulting division as opposed to their audit division. This operational advantage places them slightly ahead of PwC and secures them in the number four slot.
Consulting isn’t the end-all for the Big 4 income. KPMG shows off notably higher revenue for consulting than Ernst and Young while trailing behind the firms in revenue. While each firm is slightly different in how they attract revenue, they share similar revenue profiles that allow them to be grouped together as the Big 4.
#1: Deloitte Consulting
This is the most interesting firm in the Big 4. Not only do they have an immensely interesting history, but after being at the bottom of the Top 8 for decades, important mergers pushed them to the top of the Big 4, a spot that they enjoy to this day.
Deloitte, in a manner of speaking, is synonymous with the history of consultation and accounting itself.
When stock pricing dropped at the end of the 19th century, The Great Western Railway hired a CPA. His name was William Welch Deloitte. The rail company’s hiring of the CPA makes him the first independent consultant to audit a public company. His success with GWR allowed him to open his first office in New York City.
Ten years later, the US government contracted two accountants, Alijah Sells, and Charles Haskins, tasked with the job of investigating inefficient government practices. In their two years of work, the two were able to save half a million dollars. Haskins and Sells also decided to open their own accounting office in New York City. These offices are viewed as the first auditing firms created by American Accountants.
While the name is associated directly with the roots of professional consulting in America, it was not until the mid-1990s that Deloitte began consultation work, which skyrocketed their company.
In an attempt to meet the demand of global systems integration, Deloitte and Touche launched Deloitte Consulting in 1995. The high concentrations of intl. managers and globalization in the late 1980’s and early 90’s provided Deloitte with a wider range of clients, as well as a wider scope of challenges. Their consulting branch became the highest-grossing venture and largest management company in the world.
Deloitte in the Present Era
Deloitte practices consulting in Human Capital, technology, and Strategy and Operations. The highest level of experience works with senior executives to strategize and solve complex problems. Technology places an emphasis on finding ways to adapt clients to exponential transformations of their business, as well as improving productivity and ensuring smooth operations.
More generalized area of focus is:
- Infrastructure operations
- M&A Restructuring
- Supply Chain and Manufacturing Operations
- Service Operations
Deloitte focuses largely on MBA’s, interns from different stages of credibility, and undergraduates from all schools, not just the top tier ones. They pride themselves on ethics, integrity, and conduct, to find the best qualities in new hires.
Deloitte has taken the accolade of being the best place to kick start a career, and the most in-demand employer, as well as one of the top 5 best places to work in the industry. Presently, the company employs nearly 300,000 employees in hundreds of offices around the world.
At Deloitte you can expect to work with Fortune 500 companies in terms of finance, and Deloitte has a firm grasp in this area. If you perform well in strategies and operations, an area like tech or human capital may place you in a less prestigious, albeit more transferable role to bigger corporations. Like a fortune 500 company.
#2: PwC Consulting
Stacking up shortly behind the previous company in comprehensive income, PwC is a company that has not rested on its laurels because of financial success that they have had in the past. Chances are, we will see consulting wings pass audit revenue in years to come.
Following along the lines of most of the Big four Consulting companies we talk about on this list, the company has had many mergers in its lifespan. Notably, there were two firms that allowed the company to reach its highest potential.
The first of these companies is Price Waterhouse. In 1849, Samuel Price created a firm in London. His company merged with William Hopkins Hoyland and Edwin Waterhouse. Hoyland left the company in 1874.
After this, the firm rose in size in the 15 years following. In 1890, they created their first office in New York City. This proved to be very successful. They saw an enormous venture that showed to be the right move for their company. Price Waterhouse saw a great growth of growth throughout the period of the 1900s, creating great additions to their firm. In 1982, they renamed themselves as the Price Waterhouse World Firm.
The other company that was in charge of boosting PwC to the company that it is today is Coopers and Lybrand. Will Cooper created his accounting business in 1854, and then he became the Cooper Brothers in 1861. His three brothers joined his company, later on, helping him with running operations.
These two firms operated apart from each other until coming together in the late 1950s. Their merger was Cooper and Lybrand Intl. In the early 1990s, this joint company attempted a merger with Deloitte, but in 1993 they went back to Coopers and Lybrand.
After everything, the two companies merged in 1998 to create a modern company, PricewaterhouseCoopers.
History of PwC Consulting
After merging, PricewaterhouseCoopers opened one of its most successful branches, Management Consulting Services (MCS). And like a lot of the other accounting firms, their creation of consultation firm resulted in friction with their own company.
Throughout the 1990s, PwC enjoyed massive business growth because of their Enterprise Resource Planning System. Basically, this is a logging integration and organizational method of all their company’s data into one software.
With many auditing scandals in the early 2000s, merging separate auditing services became a more tricky operation to complete. PwC was ultimately forced to sell off their Management Consulting Services to IBM for over 3.5 billion in money and shares. The software was then rebranded as IBM Consulting Services.
In 2009, the economy slouched, which then began to put a lot of smaller companies out of business. PwC began new consulting ventures, beginning when they purchased Paragon Consulting Group and BearingPoint services. In the nearly half-decade following these mergers and business ventures, they acquired more. PwC acquired five more firms, although they kept a priority on their auditing services.
The Big 4 is known for harnessing clear career paths, and PwC is not an exception. If you go to college, then PwC will create a part-time internship that fits the schedule of a busy college student. Often times, the people who take up these internships will become full-time employees of the firm after they graduate. PwC does have its ups and downs, but they are having a resurgence. The company is up in revenue this year and had a resurgence in many areas of their practice. Whether you want to climb to the ranks or come down career and lifestyle ranks.
#3: Ernst and Young Consulting
This company sits behind the previous two aforementioned companies in revenue, but rank significantly above the others in employee and customer satisfaction. Ernst and Young find itself ranking high on the lists for many an accolade.
Ernst & Young
This company is the result of two accounting firms that had no contingencies. The first company, Ernst and Ernst, was started by Alwin C. Ernst and his brother. They provided two things,
- Using accounting information to execute decisions.
- Hiring good staff with emphasis on career merits.
These brothers had a passion to seek out talented staff, and this resulted in it being the absolute first firm to nab fresh graduates from college campuses. This history of fresh energy still resonates in the company to this day. The other firm was Arthur Young. After getting a law degree in Scotland, Young went to the United States to get a career in accounting.
In 1906, he began Arthur Young and Co. in Chicago. Both of the firms grew quickly in size, making their mark on global marketplaces. In 1970, Arthur Young and Company merged with multiple firms to create Arthur Young International. A decade later, in 1980, E&E finalized their merger with Whinney Smith to become Ernst & Whinney. This is now the fourth-largest firm in the world.
In 1990, the firms merged to become the Ernst and Young we know today.
Ernst and Young Consulting History
In the early part of this millennium, many of the accounting firms began coming under pressure to separate accounting practices from consultancy practices. EY became the first firm to separate practices under these new pressures, selling the consultation division to Capgemini.
EY Consulting Today
Still, on the younger side of operations, EY-Parthenon is spreading its success and operations in 16 countries. They are reaching nearly 1,500 employees, and already make money surpassing industry standards.
#4: KPMG Consulting
Although they are smaller than the other firms on this list, KPMG is still a powerful force consultation and accounting firms. They are the only company in the Big 4 to refrain selling of their division in the early 2000s. They are not the only members who did not acquire a boutique of consulting firms to enhance consulting practices.
KPMG’s name is actually an acronym for their four different founding companies:
- K: Piet Klynveld, who founded the accounting firm Kraayenhof & Co. In Amsterdam in the early 20th century.
- P: Comes from William Barclay Peat, the founder of the accounting firm William Barclay Peat and Company (London, late 19th century)
- M: James Marwick, founder of accounting firm Marwick, Mitchell and Company with Roger Mitchell in NYC, 1897.
- G: comes from Dr. Reinhard Goerdeler, beginner of the chairman of Deutsche Treuhand-Gesellshaft and helped to orchestrate merger of KMG, who served as chairman.
To merger allows joining firms offices to be combined in the United States, thus becoming a fast competitor in the emerging US market.
KPMG Consulting History
Going forward into the 1990s, KPMG began to focus on various lines of business. Some of these are:
- Finance Services
- Specialties and Designated Services
- Communication and Information Technology Services
In 1996, the CEO of KPMG oversaw consultant services. In the last year of the 90s, KPMG operated their consulting services separate from its accounting business. It nearly had a merger with EY in 1997, but was unsuccessful in doing so. Instead of attempting another merger, it decided to sell the stock.
As already discussed, KPMG is the only member of the Big Four to hold majority ownership of its consulting division. It is the only member that hasn’t picked up a boutique consulting division to open up the possibilities for its own local consulting practice
KPMG’s consulting practice focuses on:
- Management consulting
- Deal advising
- Risk consulting
Their practice has more than 49,000 employees in over 150 different countries. Salaries at the firm are broken down as follows:
Analyst Associate Base: $67,600
Performance Bonus: Up to $9,500
Signing Bonus: Almost Never
MBA Associate Base: $160,000
Performance Bonus: $32,000
Signing Bonus: $41,050
KPMG offers new hires a vast amount of CPE to employees. It is usually a high focus within the Big Four. It is a fantastic company to develop a more rich understanding of Fortune 500 operations.
Your Next Steps: Becoming a Consultant
Getting into the Big 4 is tough, especially as an entry-level consultant. You will have to start the process during your junior or senior year of college. You need to have a very good GPA, attend a top tier school, and excel at interview skills.
If you reach these criteria, then you should reach out to the career department at your school. They can assist you in supplying the things you need to get applications in order.
If these are criteria that you don’t quite meet yet, then you may be interested in independent consulting. This is also the case if you have a streak of entrepreneurial practices. A majority of independent consultants have more than Big 4 consultations and are able to set their own schedule. They can also focus in areas that are of interest to them, as well as work anywhere they might be on the globe.
If this sounds like the appropriate path for you, then learn more about how to get into this career as a recent college graduate.