5 Key Questions on Big Four Evolution and Strategy

Amid ongoing organizational shifts at the Big Four, 5 key questions are consistently heard among their employees, clients and ecosystem partners

The Big Four professional services firms — Deloitte, EY, KPMG and PwC — have all been undergoing organizational changes in the last couple years. TBR regularly hears five questions about how these firms manage themselves, grow and change. Taking a longitudinal view allows TBR to see that recent restructurings, layoffs and offerings all reflect how these firms are trying to address the following: who gets the best talent, who decides what’s next, who sells, how everyone in a firm knows what everyone else does, and what role will managed services play.
 
At any given moment, one or more of these firms may have solid answers, a consistent strategy and a fit-for-purpose organizational structure. Eventually, all that changes. TBR keeps these five questions in mind as we cover the Big Four, and in this blog we’re unpacking each question and why it matters.
 

 

Question 1: Who gets the best talent?

The Big Four firms have some intellectual property, well-established brands and continually evolving alliances with technology providers, but their core asset is simply people. The firms bring clients talented people to solve business problems, provide assurance and/or implement a technology, leveraging a people arbitrage business model: I’ll supply the talent when you need it and for as long as you need it, then I’ll take that talent back. The catch? Within the firm, who decides which clients get the best talent? When capabilities around a particular technology or offering are in short supply, who decides how to allocate limited resources? Local office leaders, country leaders, regional leaders, global leaders, industry leaders, lead client service partners, technology alliance leaders?
 
Managing these competing demands for resources requires exceptional leadership and, as we’ve seen through the years, sometimes means upending the organizational structure to better suit a new way of deciding who gets the best talent.

Question 2: Who decides what’s next?

Over the last decade, the Big Four firms have launched practices in areas such as blockchain, cloud, AI, people advisory, a collection of SaaS offerings, and cybersecurity, to name a handful. Some of those practices have grown, some have disappeared and some just continue to be. In every case, a collection of partners made a business case to the partnership as a whole, getting enough consensus to invest people and money into building something new. At the same time, every Big Four firm has tweaked how it makes those decisions: which partners lead on new offerings, how consensus is built and how new offerings are evaluated over time — essentially, what’s next. If this seems like an inside-the-firm small consideration, look back at the list of practices — at least three generate significant revenue streams for each firm. With hindsight, maybe those new practices and offerings appear to be no-brainers, but some group of partners in each firm still had to make the case, pull together resources and convince the firm to bet on something new. Being late to market changes the way this question gets answered. So does the fear of being too entrenched in selling today to see what’s going to sell tomorrow.

Question 3: Who sells?

Speaking of selling, the Big Four have traditionally eschewed traditional sales teams, relying on every partner (and wannabe partner) to be responsible for landing new clients and expanding footprints within existing client bases. For generations, that worked well enough; however, as all of the Big Four firms’ offerings have become increasingly infused with technology, two developments have forced some changes.
 
First, highly skilled technology-focused talent didn’t always have the skills needed to sell and so couldn’t be evaluated, promoted and compensated in the traditional partner model. The Big Four all adjusted, creating new career paths for the valuable but not-partner-track professionals. Second, the technology-dependent offerings themselves became too complex for most partners to understand and sell on their own, creating an opening for professionals who combined tech skills and sales savvy. The ongoing challenges? Who decides which partners sell to clients? Software is fundamentally different from services, so if a firm experiments with selling software, is a dedicated software sales team necessary? How can partners in one service line sell clients on tech-heavy, specialized offerings from another service line? The Big Four firms continue bending the traditional selling model, and nearly every organizational change includes some element of tackling these “Who sells?” questions.

Question 4: How does everyone in a firm knows what everyone else does?

No one has conquered knowledge management — in any company, anywhere. The Big Four firms have repeatedly launched initiatives, platforms, and evaluation and compensation metrics trying to ensure that tax partners understand all the consulting offerings and that audit partners know when and how to bring in transaction partners. TBR believes the digital transformation and innovation centers that all four firms launched in the mid-2010s (e.g., PwC’s Experience Centers) were intended, as a side benefit, to enhance internal knowledge sharing. Big Four leaders have told TBR that their fellow partners across all service lines learned something new about their own firm every time they attended a client session at one of the centers.
 
Today, all four firms are leveraging AI-enabled platforms to enhance internal knowledge management and will likely see significant improvements. But the challenge will persist, as new offerings, capabilities, use cases, learnings and people constantly refresh the pool of knowledge, which needs to be shared for the Big Four to bring their entire selves to clients. Further, forming regional super-partnerships and reducing 100-plus member firms to a few dozen reflect the need for operational efficiencies, better service for international clients, and, yes, enhanced knowledge management so that everyone in the U.K. knows what everyone in Singapore is doing.

Question 5: What role will managed services play?

If the previous four questions have been perennial challenges for the Big Four firms, shaping organizational structure and leadership priorities, this last one has been a slow-building, nearly existential question. How will professional services firms built on a prestigious reputation and elevated fees staff, price, manage and even grow managed services practices that are, by nature, more transactional than the traditional client relationship model? Each of the Big Four firms has taken a different path (which is one reason TBR sees these firms as concurrently so similar and so different), and each firm has adjusted its vision for managed services at least once in the last four years.
 
And, once again, one common element among all the reorganizations and restructurings has been competing views — within the firms themselves as well as among the partners — about what happens next with managed services. In TBR’s view, the role of managed services may prove to be the biggest differentiator among these four firms over the next five years, even as managing talent in a generative AI (GenAI) world and keeping pace with technology partners’ shifting demands challenge Big Four leadership.
 

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Conclusion: What it all means for clients, partners and the ecosystem as a whole

If you’re reading news on the Big Four, keeping these five questions in mind can be useful to understand the “why” behind the “what.”
 
If you’re a client, other questions matter more. (Are they solving your problem or not? Do you trust them? Do they bring you people you like? Nothing else matters.)
 
If you’re a technology partner in the Big Four ecosystem, these five questions are critical to understanding where your alliance is headed. Does your Big Four partner have the right talent to dedicate to your shared clients? Are they innovating with you, and who is leading that effort? Can they capably sell your technology? Do you understand what they bring to the table and what differentiates them from the other Big Four firms and the sea of IT services companies? Are they investing for the long haul or for a quick consulting gig?
 
Circling back, if you’re running a Big Four firm, how you’re addressing these questions helps determine your internal organizational structure and your strategy for the next five years. And how you explain it all to your ecosystem partners may determine how fast you grow alongside them.