Few phrases are as recognizable in today's business world as "The Big 4".
Amongst the thousands of consulting companies that exist today, these four have captured an exclusive place for themselves and are recognized as leading providers in not just consulting, but professional services at large.
In this guide, we'll breakdown everything you need to know about the Big 4. We'll look at the histories of each firm, their services and salaries, and most importantly, their path to the top of the consulting world.
Let's get started.
What is the Big 4?
While the Big 4 have become major players in the consulting field, the classification of "Big 4" actually comes from the accounting world. These four firms handle the vast majority of audits for publicly traded companies as well as large private companies.
- Deloitte Touche Tohmatsu Limited (Deloitte)
- PricewaterhouseCooper's (PwC)
- Ernst & Young Consulting (EY)
These four firms are the remaining players from the previous Big 8 accounting firms of the 80's. Mergers, acquisitions, and the disbanding of industry leader Arthur Anderson in the aftermath of the Enron and Worldcom scandals reduced the previous eight into the four we know today.
While accounting services are where the Big 4 cut their teeth, it's now just a small part of what they do. They are best classified today as the four biggest professional services networks in the world. They offer audit, assurance services, taxation, management consulting, advisory, actuarial, corporate finance and legal services, to name just few.
To really understand the Big 4, however, we need to look at the numbers.
Big 4 Consulting By The Numbers
As we already mentioned, the Big 4 absolutely dominate the accounting field. But let's put a number to that. As of 2017, the Big 4 audited 497 of the S&P 500. That's 99.4% market share of the top 500 publicly traded companies.
But audit is just the beginning. With the explosion in market value of consulting services over the last few decades, the Big 4 has begun systematically capturing consulting market share as well. These four firms now control 40% of the consulting market.
The Big Four have four principal sources of revenue:
- Consulting & Advisory
- Tax Services
- Other Professional Services
Here are the Big Four's Annual Revenue for 2017:
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
Interestingly, Deloitte is the only firm to bring in more revenue from their consulting division than their audit division, and this advantage pushes them slightly ahead of PwC to secure their spot at the top of the Big 4.
At the same time, consulting isn't the end-all metric for Big 4 revenue, as KPMG boasts notably higher consulting revenue than Ernst & Young while trailing behind the firm substantially in overall revenue.
While each firm has a slightly different revenue mix, they clearly share a similar overall revenue profile that makes their grouping together as the "Big 4" easy to understand. The same cannot be said of the firms' histories.
Let's dive in.
Section #1: Your Guide To Deloitte Consulting
Deloitte is probably the most fascinating firm in the Big 4. Not only do they have the most compelling history, but after sitting at the bottom of the Big 8 for decades, key mergers pushed them all the way to the top of the Big 4 where they sit today.
History of Deloitte
In some ways, the history of Deloitte is the history of public accounting and even consulting itself.
When the stock price of The Great Western Railway (GWR) fell in 1849, they company hired an independent public accountant named William Welch Deloitte. GWR's hiring of Deloitte made him the first independent consultant to be hired to audit a public company. Deloitte's successful work with GWR quickly catapulted his business, and by 1880, he had opened an office in New York City.
Just over a decade later, the United States government appointed two accountants, Charles Haskins and Elijah Watt Sells, to investigate government inefficiency. In two years of simplifying and improving work quality, as well as increasing efficiency, Haskins and Sells were able to save the government $600,000 per year. With inflation that is the equivalent to $16.8 million per year in 2018. Haskins and Sells decided to open their own accounting offices in New York City in 1895, and these offices are considered to be the first operating auditing firms established by American accounts.
After the market crash in 1929, a managing partner of Haskin and Sells, Colonel Arthur Carter, also President of the New York Certified Public Accountant's, testified before the US Senate Committee of Banking and Currency, stating that independent audits should be mandatory for public corporations. In 1933, the same year he gave the speech, Congress enacted The Securities Act required public corporations to file certified independent registration and annual public reports. The Securities of Exchange Commission was created to oversee this gargantuan undertaking.
In 1952, Deloitte's firm (then named Deloitte, Plender, Griffiths, & CO.) merged with Haskins and Sells to form Deloitte Haskins & Sells. In 1989, the two smallest firms within the "Big 8", Deloitte Haskins & Sells and Touche and Ross, merged to form Deloitte and Touche, paving the way for their survival to the eventual Big 4.
History of Deloitte Consulting
While the name Deloitte is directly connected with the beginning of professional consulting, it wasn't until that 1995 that Deloitte's "Consulting" services got off the ground.
In order to meet the demand and coordination of global systems integrations, Deloitte and Touche launched Deloitte Consulting in 1995. The high concentration of international mergers and globalization in the late 1980's and early 1990's provided Deloitte with a broader range of clients facing a diverse set of challenges. Deloitte's consulting branch soon became its highest grossing venture and, for a time, the largest management consultancy in the world.
Deloitte Consulting practices in three main areas: Human Capital, Strategy & Operations, and Technology. The most prestigious and highest level of experience, Strategy & Operations, involves working with senior executives to strategize and solve complex problems. Technology focuses on finding ways to adapt clients to the exponential transformations of their business, as well as improving productivity, and ensure smooth operations. Human capital provides research, analytics, and industry consultation to direct clients how to structure and execute operations throughout all branches of the business.
More generalized areas of focus would be these six specific areas:
- Infrastructure Operations
- M&A Restructuring
- Supply Chain and Manufacturing Operations
- Service Operations
Deloitte focuses largely on recruiting MBA's, interns from various stages of credibility, and undergrads; not necessarily from top tier schools either. They pride themselves on their ethics, integrity, and code of conduct, and make it explicit they look for these qualities in whomever they hire. They offer a wide range of hiring advice and an intern program at their website.
Deloitte has been ranked as the best place to launch a career, the most in-demand employer, and one of the top 5 most attractive places to work. They now employ nearly 264,000 employees in hundreds of offices worldwide. In 2017, Deloitte Consulting's revenue grew the largest out of its five sources of revenue at 15.7 percent.
Analyst Base: $88,000 (Canada: C$70,000) (NZ: NZ$47,000) (UK: £39,500)
- Performance Bonus: up to $13,200 (15% of base) (UK: up to 5%)
- Signing Bonus: $12,500 (Canada: C$5,000) (NZ: NZ$2,000)
MBA Associate Base: $145,000 (Canada MBA: C$125,000)
- Performance Bonus: up to $31,900
- Signing Bonus: $25,000 (additional $17,500 for returning interns, $20K early signing) (Canada: C$20,000)
At Deloitte you can expect to work with Fortune 500 companies in areas of finance, as Deloitte has a stronghold in this area within this area. But if you have a strong suit in strategies and operations, an area like technologies or human capital may land you in less prestigious, but more transferable role to a larger organization; like a Fortune 500 company.
Section #2: Your Guide To PwC Consulting
Coming in just behind Deloitte in total revenue, PwC is another firm that hasn't let its past dominance slow down it's continued rise. The firm sits comfortably at #6 on our list of top consulting firms by revenue, and we are likely to see its' consulting wing surpass audit in revenue within the next few years.
History of PwC
Like most of the Big 4, PwC is the result of multiple mergers, but it's dominance today is primarily the result of two firms.
The first, Price Waterhouse was started by two separate companies. In 1849 Samuel Price founded his accounting office in London. In 1865, he merged his company with with that of William Hopkins Hoyland and Edwin Waterhouse. In 1874, Hoyland left, and the company was named Price, Waterhouse & Co.
The firm grew quickly over next 15 years, and in 1890, opened its first international office in New York City, a venture that quickly proved successful. Price Waterhouse saw an enormity of organic growth worldwide throughout the 20th century, adding numerous offices and practices to the firm, and in 1982, it re-classified itself as the Price Waterhouse World Firm.
The second key player of what we now know as PwC was Coopers & Lybrand. William Cooper founded an accountancy business in 1854 which turned into Cooper Brothers in 1861 when his three brothers joined the company. A separate company, formed much later in 1898 in the United States, Lybrand, Ross Brothers and Montgomery, was started by Robert H. Montgomery, William M. Lybrand, Adam A. Ross Jr. and his brother T. Edward Ross.
These two firms practiced separately until their paths crossed in 1957. The merger was named Coopers & Lybrand internationally. In 1990, Coopers & Lybrand saw a brief merger with a familiar name in Deloitte Haskins & Sells, but changed its title back in 1992 to Coopers & Lybrand.
Finally, the two companies, Price Waterhouse and Coopers & Lybrand, merged in 1998 to form the firm that stands today: PricewaterhouseCoopers.
History of PwC Consulting
Soon after the merger, PricewaterhouseCoopers created its fastest growing branch, Management Consulting Services (MCS). And just like with many of the other accounting firms, the creation of a consulting wing resulted in friction within the firm.
Throughout the 1990's, PwC saw massive growth through its global use of Enterprise Resource Planning Systems (ERP). ERP is essentially the logging, integration, and organization of all a large company's data into one management software where separate departments can converge their data for applicable uses elsewhere throughout the company. Because PwC was providing its auditing and ERP consulting services under the same umbrella of operations, this posed a conflict of interest.
PwC chose to disengage MCS with its audit clients in 1999-2000, but this also posed a problem. PwC's most significant audit clients were also its most significant ERP clients. MCS saw an immediate and massive decrease in revenue for this integrity move, and
With the auditing scandals of the early 2000s and the new provisions of Sarbanes-Oxley Act (SOX), merging auditing and consulting services became even more difficult, and PwC was ultimately forced to sell off their MCS division to IBM for a meager sum of $3.5 billion in cash and stock, which then rebranded as IBM Consulting Services.
In 2009, as the economic collapse began putting smaller firms out of business, PwC began a new chapter of its consulting pursuits through acquisition, starting with the purchase of Paragon Consulting Group and commercial services business BearingPoint. Over the following five years, PwC acquired five more firms, the most significant being Booz & Company in 2014. While PwC's main source of revenue remains its auditing services, its revamped consulting wing now constitutes over 32% of total revenue.
PwC practices and dominates a large amount of the global advisory market. Its long list of services includes:
- Asset Management
- Banking & Capital Markets
- Energy & Mining
- Entertainment & Media
- Financial Services
- Health Industries
- Healthcare Payers
- Healthcare Providers
- Hospitality & Leisure
- Industrial Products
- Law Firm Services
- Pharmaceuticals & Life Science
- Power & Utilities
- Private Company Industries
- Private Equity
- Public Sector
- Retail & Consumer
The Big 4 is known for its clearcut career paths, and PwC is no exception. If you are university student, PwC will structure a part-time internship to develop knowledge and skills with the immediate participation in meetings with experts and clients within the company. More than 88% go on to become full time employees after graduation.
Analyst Base: $72,000 (Canada: C$61,000)
- Performance Bonus: up to $10,800 (15% of base) (Canada: up to $9,150)
- Signing Bonus: $5-10,000
MBA Associate Base: $135-140,000
- Performance Bonus: up to $27,000
- Signing Bonus: $25,000
Like most of the Big 4, PwC is a great place to launch a career and to specialize and hone your skills in one of the firm's many areas of practice. Whether or not you attempt to climb the ranks to partner comes down to your own long-term career and lifestyle goals.
Section #3: Your Guide To Ernst & Young Consulting
While Ernst & Young sits slightly behind Deloitte and PwC in terms of revenue, they take second place to nobody when it comes to branding and employee satisfaction. E&Y consistently finds itself in the top handful of selections for every conceivable award, whether the metric is Best Places To Work, Most Diverse Companies, Where Women Want To Work, Best Places To Launch A Career, and many, many more...
History of Ernst & Young
Ernst & Young (EY) is the culmination of two separate accounting firm journeys. The first, Ernst & Ernst, was started by Alwin C. Ernst and his brother in 1903. The brothers prided themselves on two things:
- Using accounting information to make informed business decisions
- Hiring fantastic staff with a strong emphasis on character and individual merit
The brother's drive to find great talent resulted in it being the very first accounting firm to recruit directly from universities beginning in the 1930's, and that talent-first culture continues to define EY to this day.
The second key firm behind today's EY was founded by Arthur Young. After obtaining a law degree in Scotland, Young moved to the United States to pursue a career in accounting, and in 1906, he started Arthur Young & Company out of Chicago.
Both firms quickly made their mark on the global marketplace seeing fast worldwide growth throughout the mid-20th century. In 1970, Arthur Young & Company merged with multiple European firms to become Arthur Young International, and just a decade later, in 1979, Ernst & Ernst officialized its merger with Whinney Smith & Whinney to form Ernst & Whinney, the 4th largest accounting firm in the world.
In 1989, the two firms merged to become the Ernst & Young we know today.
History of EY Consulting
When accounting firms began receiving pressure to separate their accounting practices from their consultancy practices in the early 2000's, EY became the first firm to officially separate it's practices, selling its consulting division to French IT services company, Capgemini.
Later in 2014, EY partnered with Parthenon, a strategy based firm, established in Boston, 1991 to once again offer strategy-based consulting services to EY's global roster of clients.
Ernst & Young Today
Hiring at EY-Parthenon is pointed in two directions. Undergraduates and Master's candidates with less than three years of work experience can become an associate where they get first hand training and immediate placement within their chosen field.
EY-Parthenon Consulting focuses on the following fields:
- Consumer and Industrial Products
- Life Sciences
- Oil and Gas
- Information and Media
- Private Equity
- Financial Services
Although relatively still in its infancy, EY-Parthenon is amassing an enormous amount of success in now over 16 countries. They now have approaching 1,500 employees, and already have an above average compensation.
Analyst Associate Base: $75-90,000
- Performance Bonus: None
- Signing Bonus: $3-7,000
MBA Associate Base: $145,000
- Performance Bonus: up to $31,700
EY prides itself on its social impact, and focuses on collaboration and sustainable career growth from within the company. It's a highly popular place to work and as we mentioned earlier, consistently tops the list of best places to work for just about every available metric.
Section #4: Your Guide To KPMG Consulting
While they happen to be the smallest and probably the least flashy of the Big 4 firms, KPMG remains a powerhouse player in both the accounting and consulting fields. Interestingly, they are the only member of the Big 4 to refrain from fully selling off their consulting division in the early 2000s, and they are also the only member who has not yet acquired a boutique consulting firm to enhance their consulting practice. Is it possible that a consulting acquisition catapults KPMG to the top of the ladder in the near future?
History of KPMG
There are four cornerstones to the KPMG initialism:
- The "K" comes from Piet Klynveld, who founded the accounting firm Klynveld Kraayenhof & Co. in Amsterdam in 1917.
- The "P" comes from William Barclay Peat, who founded the accounting firm William Barclay Peat & Co. in London in 1870.
- The "M" comes from James Marwick, who founded the accounting firm Marwick, Mitchell & Co. with Roger Mitchell in New York City in 1897.
- The "G" comes from Dr. Reinhard Goerdeler, who began as chairman of Deutsche Treuhand-Gesellschaft and helped orchestrate the merger of KMG, where he then served as chairman.
In 1925, Marwick, Mitchell & Co. merged with William Barclay Peat & Co in 1925 to form Peat, Marwick, Mitchell & Company, which was ultimately shortened to Peat Marwick. This merger allowed the joining firms' combined offices to fully access both the European markets as well as the quickly emerging US market.
By the 1970's, Peat Marwick had become the largest public accounting firm in the United States, and with increasing public sentiment that the finance industry needing greater accountability, the firm made the unprecedented move to have itself audited by another public accounting firm in Arthur Young & Co.
In 1978, Peat Marwick began to prepare to increase their globalization efforts in the world economy by forming Peat Marwick International. A year later Klynveld Kraayenhof & Co. merged with two other firms, McLintock Main LeFrentz, and Deutsche Treuhandgesellschaft to form Klynveld Main Goerdeler (KMG).
In 1986, Peat Marwick merged with KMG, forming what was then the largest accounting firm in the world. The next year, the firm officially rebranded as KPMG, which persists to today.
History of KPMG Consulting
Heading into the 1990's, KPMG begin a long term focus on six lines of business:
- Financial Services
- Healthcare & Life Sciences
- Information & Communications
- Manufacturing, Retailing & Distribution
- Special Markets & Designated Services.
In 1996, the CEO of KPMG in the US began to oversee a strengthening of its consultancy services. In 1999, KPMG separated it consulting division from its accounting business. It had almost merged with EY in 1997, but after the merger fell through, it decided to sell stock instead in its consulting business instead. Cisco Systems Inc. purchased a 20% stake in the KPMG consulting in 1999.
As we previously mentioned, KPMG is the only member of the Big 4 to maintain majority ownership in its original consulting division. It is also the only member that has not yet acquired a boutique consulting firm to enhance its consulting practice.
KPMG's consulting practice today revolves primarily around the following three areas:
- Management Consulting
- Risk Consulting
- Deal Advisory
KPMG's consulting practice has more than 50,000 in 155 different countries. Salaries at the firm are broken down as follows:
Analyst Associate Base: $68,000 (Canada: C$62,000) (UK: £32,000)
- Performance Bonus: up to $8,160
- Signing Bonus: Rare
MBA Associate Base: $145,000
- Performance Bonus: up to $25,000
- Signing Bonus: up to $35,000
Once hired KPMG offers an extensive amount Continued Professional Education (CPE) to its employees. KPMG has an unusually high focus within the Big 4 on technical and analytical work. It is an excellent place to develop a deep understanding of Fortune 500 business operations.
Next Steps: Become A Consultant
Getting into the Big 4 as an entry level consultant is tough going. You will need to begin the process during your junior or, at the latest, senior year of college. You will also need to have an exceptional GPA, be attending a top school, and be well above average in interview settings.
If you meet those criteria, your school's career department will be able to supply everything you need to line up the needed applications and interviews.
If you don't meet those criteria, or you simply have a an entrepreneurial streak that won't keep quiet, independent consulting might be for you.
Many independent consultants earn even more than Big 4 consulting employees, and they have the freedom to set their own schedule, choose their own areas of interest, and work from anywhere in the world.
If that path interests you, click below to learn how our consulting students bringing in clients month after month, without having to pitch or beg.