Big 4 Consulting Firms – Deloitte, EY, PwC, KPMG | MConsultingPrep

… to Big 4 consulting firms

Since the 1990s, the Big 4 (or more appropriately, the Big 5) have been deeply engaged in management consulting – in fact when Enron collapsed in 2002, Arthur Andersen was earning more from consulting services provided to that company than from auditing services. The same thing applies to the rest of the Big 5 – consulting, along with legal and tax advisory, was providing the majority of their revenue. The problem is when audit firms earn so much from non-auditing services provided to the same clients, there is an incentive to ignore the holes in the clients’ financial statements, to build long-term relationships and sell other services.  

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.