Companies have employees that help run their operations. These employees may fall into several categories based on their rank and position. Usually, the higher-up employees are responsible for making decisions and strategies.
They play a crucial role in helping companies during challenging situations or events. However, they cannot cover every circumstance.
Companies may run into problems that they can’t solve internally. These problems are of specialized nature of which employees may lack experience. In most cases, these situations arise unpredictably.
Therefore, companies may not have enough time or resources to respond appropriately. On top of that, they may not have the expert staff to deal with those problems.
Nonetheless, companies must tackle these problems to ensure longevity. In that regard, companies may have two options. The first includes hiring professionals that can help with those problems.
Usually, however, these situations are temporary or happen infrequently. Therefore, this option may not be suitable. The alternative solution may include obtaining the services of a consultancy firm.
What is a Consultancy Firm?
A consulting firm is a business that employs industry-specific experts who offer professional advice. These professionals provide companies and other entities with advice on several matters. Usually, each industry may have a specific consulting firm.
Therefore, companies must seek a firm to help them with their needs. Consultancy firms allow companies to outsource their tasks without hiring employees.
A consultancy firm guides various essential areas. On top of that, they may also provide services to take over specific functions. However, most of these firms play an advisory role rather than practical work.
These firms are present in every industry and provide critical services to most companies. For most companies, consultancy firms can help find solutions to complicated problems.
Consultancy firms may include single or multiple professionals. These professionals are experts in their field or industry. Usually, they have significant experience in the area where they provide advice.
The structure for these consultancy firms may differ based on various factors. On top of that, these firms have specific areas where they offer services. Therefore, companies must find a firm that can solve their needs.
The services that consultancy firms provide can differ from strategy creation or problem-solving. Some of these firms may also be active in planning activities. However, their work scope may even span beyond consultancy roles.
In some industries, these firms also provide project management solutions. Therefore, they may also offer help with practical tasks. However, consulting is the primary service provided by these firms.
Overall, a consultancy firm is a business that provides advice on several issues. These firms may differ based on the industry where they operate or their services. Nonetheless, they play a crucial role in obtaining expert solutions.
While consultancy firms primarily offer consultancy, they may also take on practical tasks. In exchange, they charge customers a fee, which constitutes revenues.
What are the Big 4 Consulting Firms?
Consulting firms differ based on their solutions and expertise areas. However, some firms cover a broad range of services and solutions. On top of that, these firms are significantly larger than others in size, revenues, and customers.
4 firms are on the top in the consulting industry, referred to as the Big 4. However, these are not firms but rather professional services networks spread globally.
The Big 4 consulting firms include Deloitte, PricewaterhouseCoopers (PwC), KPMG, and Ernst & Young (EY). These firms are the top-ranked consulting providers in the world.
In addition to these, some other firms may also be considered the top names in the industry. However, these firms do not have the same stature and rank as the Big 4.
The Big 4 consulting firms provide several financial and professional services. These include accounting, taxation, risk advisory, audit, transaction advisory, consulting, etc. Of these, the Big 4 firms are well-known for their audit services.
Their customers include public and private companies throughout the world. Most companies prefer these firms for their external and internal auditing services. However, their other services are also of high quality.
In the past, the top consulting firms worldwide were 8. However, this number has fallen to 4 due to several scandals and mergers.
On top of that, some of the Big 4 consulting firms have gone through a name or structural change. Currently, only the four firms mentioned above form the Big 4 consulting firms.
Overall, the Big 4 consulting firms include four firms that are the top names in the industry. These firms provide several professional services and solutions. However, they primarily focus on financial and other related services.
These firms receive their ranking based on the revenues they generate worldwide. On top of that, they include network firms in other countries that help with their stature.
Which firms are a part of the Big 4 Consulting Firms?
As mentioned, four firms constitute the Big 4 consulting firms. These firms include Deloitte, PwC, EY, and KPMG. Usually, these firms get ranked based on their revenues during a year.
In 2021, Deloitte was the consulting firm with the highest revenues, while KPMG generated the lowest. PwC and EY ranked 2nd and 3rd, respectively.
A short history of the Big 4 consulting firms is as follows.
Deloitte Touche Tohmatsu Limited, or Deloitte, is a multinational professional services network. The firm operates in over 150 countries and territories worldwide. Initially, it started its operations in 1845 in London through William Welch Deloitte.
Later, it merged with Haskins & Sells to form Deloitte Haskins & Sells in 1972. In the US, it joined Touche Ross and became Deloitte & Touche in 1989.
In 1993, Deloitte got renamed Deloitte Touche Tohmatsu. Currently, it operates under the same name, although abbreviated to Deloitte.
In 2002, Deloitte merged with Arthur Anderson in the UK and several other markets. Deloitte holds the highest market share among the Big 4 consulting firms.
PricewaterhouseCoopers (PwC) is a multinational professional services network of firms. Currently, it operates as a partnership under the PwC brand. This network includes operations in 157 countries and 742 locations worldwide.
The firm’s largest market is Western Europe. PwC originates from Samuel Lowell Price, an accountant who founded an accountancy practice in 1849.
In 1865, Price partnered with William Hopkins Holyland and Edwin Waterhouse. After Holyland left, the firm became Price, Waterhouse & Co. in 1874. In 1998, it merged with Coopers & Lybrand to form PricewaterhouseCoopers.
The latter came from various mergers between firms throughout the 19th and 20th centuries.
KPMG International Limited, or KPMG, is a multinational professional services network. The firm operates in 147 countries. Similarly, its name stands for “Klynveld Peat Marwick Goerdeler”. KPMG started in 1818 when John Maxham opened a company in Bristol.
However, this company went through several mergers and name changes over time.
The firm gets its name from various firms. These include Marwick Mitchell & Co., founded in 1897. Similarly, another name on the list is Klynveld Kraayenhold & Co., originating in 1897.
It also consists of William Barclay Peat & Co., which merged with Marwick Mitchell & Co. in 1925. The last part of its name comes from the first CEO of KMG, Reinhard Goerdeler.
Ernst & Young (EY)
Ernst & Young (EY) Global Limited, or EY, is a multinational professional services network. It operates 700 offices in 150 countries globally.
Like the other names on the list, EY has gone through various mergers of firms and name alterations over the years. The oldest of these firms includes Harding & Pullein, founded in 1849.
However, it gets its name from two firms. The first is Ernst & Ernst, founded in Cleveland. This firm operated under Alwin C. Ernst and his brothers. Similarly, the latter part of its name comes from Arthur Young & Co., founded in 1906.
This firm operated under an accountant, Arthur Young, in Chicago. In 1989, after several mergers, these firms joined to form EY.
Consultancy firms include a network of professionals that provide industry-specific advice. Usually, these professionals are experts and offer help in various areas.
The Big 4 consulting firms include Deloitte, PwC, KPMG, and EY. These firms are the top names in the industry and primarily provide financial services.