Big 4 consulting firms
Although MBB firms virtually get all the attention, the Big 4 firms also offer attractive career opportunities for prospective consultants. So today, let’s find out about these firms, the jobs they offer and how they might be different from McKinsey, BCG or Bain.
Who are the Big 4 firms?
From Big 4 accounting firms…
However, the Big 4 wasn’t always the Big 4 – for most of the 20th century, the accounting industry was dominated by the “Big 8” firms – Deloitte Haskins & Sells, Touche Ross, Ernst & Whinney, Arthur Young, Peat Marwick Mitchell, Price Waterhouse, Coopers & Lybrand, and Arthur Andersen. As you may have guessed from the names, numerous mergers reduced the Big 8 to Big 5: Arthur Andersen, Deloitte & Touche, Ernst & Young, KPMG (the PM stands for Peat Marwick), and PricewaterhouseCoopers. And then in 2002, with the Enron scandal, Arthur Andersen met its demise and its practices were split between the remaining firms, now called “the Big 4”.
Nonetheless, today accounting/auditing services only contributed a minor part of the Big 4’s total revenue. The rest comes from assurance (audit), advisory, and consulting – the last of which is our main topic.
… to Big 4 consulting firms
That led to increasing pressure from legislators, which coupled with the Enron scandal, forced some of the Big 4 firms to split their consulting arm in the early 2000s – EY sold off its consulting practices to the French IT firm Capgemini, while PwC’s consulting branch was acquired by IBM. Deloitte and KPMG retained a majority hold on their consulting arms (although part of KPMG’s consulting branch did split to become BearingPoint). Andersen also had its consulting practice split off as with the Big 4, but out of internal conflicts – and although the “mothership” has crashed, consulting practice remains strong, and I’ll discuss it near the end of this article.
20 years after these splits, however, the Big 4 firms have regained their positions within the consulting industry – as the four largest consulting firms globally. Among them, Deloitte, EY, and PwC have already acquired boutique consulting firms with prestige in high-level problem-solving, to augment their traditional consulting arms which focus more on the implementation side.
Big 4 vs MBB – The firms, the projects, and the career
Comparing the firms
As of 2019, the four largest consulting firms in terms of revenue are the consulting branches of the Big 4 firms. They surpass the more prestigious MBB firms (McKinsey, BCG. Bain, also called the “Big 3” of consulting) by a fair margin – the smallest of the Big 4 (KPMG) has 40% more revenue than the largest of MBB (McKinsey).
In terms of employee and office numbers, the Big 4 firms also outdo MBB firms by 5-10 times – each has somewhere around 600-800 offices and 200,000-300,000 employees. By comparison, the most far-reaching MBB firm – McKinsey – is the only one to possess over 100 offices (+130), and 27,000 employees.
Although the Big 4 firms do have non-consulting services to add into the numbers, these wildly different figures and the fact that MBB firms enjoy all the prestige and attention hints at another crucial difference between the two groups – the nature of their projects.
Comparing the projects
MBB projects normally entail high-level strategy consulting, while Big 4 consulting services lean towards implementation and highly-specific problems in areas such as accounting, tax, risk or legal advice. On the MBB side, the projects provide more tailored solutions, while Big 4 answers are generally more formulaic and methodical. MBB consultants work with their clients in shorter terms – usually 2-4 months, while Big 4 consultants can be engaged with one client company for 6-8 months or even year-long, providing oversight and helping the client put their solutions into practice.
These differences in projects lead to major implications for anyone who pursues a consulting career.
Comparing the careers
The greater number of Big 4 consulting projects, as well as higher level of involvement compared to their MBB counterparts demand more manpower. This lowers the barrier and allows each candidate a better chance at a consulting career.
In addition, the sheer geographical scale of Big 4 operations makes their jobs more available. Each Big 4 firm operates in 150-ish countries – so unless you live in the poorest and least promising markets, you will find at least one Big 4 firm in your home country. MBB firms, on the other hand, are much more selective – McKinsey offices are only present in 65 countries, while BCG and Bain are in 50 and 37 countries respectively (nonetheless, you may still join an MBB office in neighboring countries – MBB partners can start projects in countries without an office – in fact, they only open offices in countries with a good track record of successful projects).
MBB consultants are paid more, but Big 4 consultants enjoy better work-life balance
Consultants from McKinsey, BCG and Bain are not paid much more than their Big 4 fellows – as far as base salaries are concerned. In the United States, junior consultants in both groups are paid $70,000-$90,000 per year as base, while that of senior consultants fluctuate around the $140,000 mark. However, with bonuses and profit sharing, the gap between MBB and Big 4 firms widens (see the charts below).
On the other hand, Big 4 consultants do have somewhat better work-life balance, with the weekly hours ranging from 50 to 70. MBB consultants, on the other hand, can expect 60-80 hours per week. In reality, however, there is more variance between the projects than between two groups of firms.
MBB consultants have better learning opportunities, prestige and exit options
Due to the high-level nature of their projects, MBB consultants frequently come into contact with high-level executives on the client side, while Big 4 consultants – especially the junior ones – mostly work with the middle managers. MBB projects also demand their consultants to be more creative and flexible in problem-solving than Big 4 projects; in addition, MBB consultants also tend to work in more industries and functions than their Big 4 fellows who specialize early. The level of learning from exposure is understandably much better on the MBB side; McKinsey, BCG and Bain can also afford to spend more on each consultant, leading to better training and development, including the world’s top MBA programs.
Prestige-wise, MBB firms have been standing head-and-shoulders above the rest of the consulting industry, including the Big 4. In the true consulting spirit, I present to you Vault’s rankings of the most prestigious consulting firms in the US in 2020 – even though the Big 4 and their strategy consulting arms take up 6 slots in the top 15, they are considerably behind the “Big 3” – the only gap wider than 1 point (1.48) is between Bain and Deloitte – the least prestigious of MBB and the most prestigious of Big 4.
15 Most Prestigious Consulting Firms in the US – Vault 2020
McKinsey & Company
Boston Consulting Group
Bain & Company
Deloitte Consulting LLP
Booz Allen Hamilton
EY (Ernst & Young) LLP Consulting Practice
KPMG LLP (Advisory)
IBM Global Services
Strategy&, Part of the PwC Network
All this learning and prestige, along with the extensive and influential alumni network of MBB firms (especially McKinsey – the “CEO Factory”) gives their consultant incredible exit opportunities offering salaries at least 30-40% higher than their income from consulting. This creates what I call an “exit culture”, where a majority of consultants view the firms as launching pads for their careers. Nonetheless, Big 4 firms are also respectable career launching pads – offering the same kind of exit opportunities as MBB, although the quantity and quality (pay) are usually lower.
Bottom line: Big 4 offer attractive careers, but go for MBB if you can
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Big 4 Consulting – Deloitte vs PwC vs EY vs KPMG
Deloitte consulting salary and career offers
PwC consulting salary and career offers
EY consulting salary and career offers
KPMG consulting salary and career offers
How to get into Big 4 consulting firms?
1-on-1 coaching with top ex-MBB consultants
Accenture consulting and the tier-2 firms (Bonus content)
What is Accenture?
So large, in fact, that it is the largest consulting firm by employee number – at a staggering 500,000 in 2020, the firm is even larger than the Big 4. But where did this giant come from?
The last time we left off with Arthur Andersen, it was facing demise following the Enron scandal. Before that, however, the firm had a consulting division, called “Andersen Consulting” – internal conflicts, however, led the division to spin off in 2000. As part of the settlement, Andersen Consulting was required to change name, and so the fancy-sounding “Accenture” (“accent on the future”) was born.
On a side note: among the top 8 consulting firms discussed here (MBB, Big 4 and Accenture), Accenture is the only public company – all others are privately-owned.
Accenture consulting salary and career offers
Tier-2 (or more) consulting firms
This “tier system” is not an universally-agreed grouping (like MBB or Big 4) – depending on the situation and the person, you may even hear about “Tier 3” or “Tier 4”, while some boutique consulting firms might be grouped into “Tier 1” with MBB due to their prestige in a specific industry/function/location.
I would also advise you to not depend on this tier system due to its vague and generic nature, and its tendency to bury the attractiveness of the so-called Tier-2/3/4 firms. These firms also offer salaries comparable to McKinsey or Deloitte, excellent learning opportunities and exit options (compared to most jobs on the general market – or even within the field of consulting), and probably a more suitable workplace culture for you in the long run.
Management consulting is an industry providing expensive and professional advice to organizations to improve their overall performance, through better “management”, which includes strategy, governance, operation, organization, finance, and marketing. The three most prestigious management consulting firms are McKinsey, BCG, and Bain (the Big Three).