The Big Four Firms can harness AI to disrupt smaller consultancies by moving down market to capture medium-sized enterprises — at least, that’s the theory

If Deloitte, EY, KPMG and PwC enable AI at scale within their own organizations, they should be able to successfully compete with firms like Grant Thornton, Protiviti and Kearney for consulting spend by companies in the $500 million to $5 billion range. In almost 19 years of watching the Big Four firms operate, I’ve seen countless small- and medium-sized enterprises’ initiatives launch, falter and fade. AI promises to upend that track record and, finally, make these firms players in the midmarket.
 
Except it won’t, at least not any time soon. For starters, anyone who has seen enterprisewide AI adoption at scale knows that success, when it comes, comes in small, incremental steps, not as massive, business-model-altering change. AI implementation is harder than it looks, and AI adoption at scale requires time, tech, leadership, experimentation and change management.
 
The Big Four firms provide exceptional advice on adopting AI at scale and have become adept at helping clients on their AI journeys (“tell me what to do” and “do it for me”), but they’re not immune to the challenges all large organizations face. In fact, given their consensus-dependent organizational model, these firms might face higher hurdles than the average top-down decision-making company.

Change management is perhaps the biggest roadblock between the Big Four and the midmarket

Smaller engagements mean more clients, and although AI offers assistance, shouldn’t a midmarket client paying Big Four fees receive Big Four quality and service? Are the AI-enabled solutions equivalent to human expertise, and do they provide cost savings for everyone? TBR research says no to the latter, as digital full-time employees cost more than human workers, at least right now.
 
Until those midmarket companies aiming to become large global enterprises heed the advice of junior partners at Big Four firms, those partners are stuck cultivating, tending and harvesting more clients to close the revenue gap with senior partners. Do they get the chance to lead a major client like Citibank or be their firm’s global financial services lead by serving a local savings bank? No. Serious change management needs to happen within the Big Four, enabled by AI and specifically addressing the organizational, reputational, and compensational challenges of sustaining an investment in the midmarket. Do these firms have more on their plate right now? Yes. (Learn more in our Management Consulting Benchmark.)

With AI more difficult to adopt than expected and change management the bugaboo that never fades, a third element still exists in keeping the Big Four from significantly expanding in the midmarket: the competition

The “tier two” firms listed in the previous section and their peers bring three strengths that help keep the Big Four at bay:

• Flexibility: Smaller firms can learn, adopt, deliver and sunset faster, making them more responsive to smaller enterprises’ highly specific needs. Where they trail in global scale, they lead in pivoting to meet clients’ shifting demands.
• Talent: Consulting depends on relationships, showing up and being smart (maybe not in that order). “Tier two” consultancies have tons of “tier one” talent, including consultants recruited from Big Four firms, who sought more entrepreneurship, creativity and runway.
• Trust: A mix of cultural affinity, affordable pricing and competence with long-standing relationships and midmarket clients makes the value of working with smaller consultancies easy to understand. These attributes make Grant Thornton, Protiviti, Kearney and their peers much harder to displace, even by AI-enabled solutions and more bots.

Do you think there are playbooks for Big Four firms to seriously disrupt the midmarket over the next five years? Do you think Accenture could be a wildcard here? Leave your response in the comments!