Consulting firms 101, or consulting firms basics, is something you must understand if you’re preparing to go into consulting. Understanding the differences between the Top 3 firms, MBB firms, and the Big 4 accounting firms, versus the tier 2 boutique firms, is absolutely essential to get off on the right foot. Listen to Jenny Rae as she gives you the basics of consulting firms, giving you the information you need to launch your consulting career on the right career trajectory.
Consulting Firms 101 (Basics) YouTube Transcription
Consulting firms 101-basics, McKinsey Consulting to Deloitte consulting and beyond. This is one of our favorite things to answer questions about because honestly, it’s really hard from the outside to tell what makes consulting firms different from one another. Let me start by saying that there are differences in consulting firms. But within the consulting space, the differences are nuanced, and there’s a lot of insights to go into. We’re gonna go over a number of the nuances by grouping today at a very high level. So, you understand what some of the differences are between firms like McKinsey Consulting and Deloitte Consulting.
The Top 3 Consulting Firms- MBB
In the consulting firms landscape, there are three main categories. And the one that we always start with is the big one. The top three. The top three firms are McKinsey, Bain, & BCG. And no matter how much Deloitte wants to be included in there, the three remain the three ‚ the top three. They are MBB, and they’ve been that way for some time, and they’re likely to remain that way for some time in the future.
What are some of the characteristics of the MBB firms? Number one, out of all of the firms, they have the highest Billings or project. Most firms staff about six people per project, so there’s parity across the staffing. But McKinsey, Bain, & BCG charge on average, 100 to 300 thousand dollars more per project ‚ which is a monthly rate for those six people on the team.
Second, the firms are smaller than many other firms. They are more pure strategy firms. So there’s less strategy work. It’s very important work, it commands that price premium, but they’ve maintained a smaller size as they’ve grown. In addition, they are private partnerships. None of them are publicly traded. So that means that there’s a lot of integration in the way that the firms believe that they should be behaving, and the investments of the partnership are making.
Finally, the firms have historically been focused more on strategy than implementation. And that means something really important for you if you’re thinking about joining the firms. Now between McKinsey, and Bain, & BCG ‚ the 3 MBB firms ‚ there are major differences, but we’re not going to go into those in this video.
The Big 4 Accounting Firms
The next here are the big four. These are otherwise considered really big, powerful consulting firms. But they’re different from the top three. And the number one way that they’re different, is that they cover a wide breadth of information, they cover a wide breadth of industries, and they cover a wide breadth of the content that they collect from all of their different clients and that they share.
These firms consulting practices historically were born out of their accounting practices. And really in much the same way that consulting was born, they were entrepreneurial endeavors to help clients be more forward-looking as opposed to backward looking. Like their audit, their tax, and their accounting practices. So when they’re forward looking they’re doing things like strategy, but they’re also doing implementation, operation, advisory ‚ they’re doing all kinds of different things. And those different practices are larger in sum than any one of the MBB firms.
The four firms that are in the big four space are: PwC (PricewaterhouseCoopers), Deloitte Consulting‚ and Deloitte as a whole has a very large practice across multiple different disciplines. EY or Ernst & Young, and finally KPMG.
The Big 4 Characteristics
All of them have, again, differences, just like the MBB firms do. But their major characteristics are that they bill more by the hour than by the project, and their project fees will sometimes be set, but they’re still gonna be more variability in them. There are these wide varieties of practices, there are wide varieties of entrance points, and there are also wide varieties of projects that they cover. So that width can be really difficult to navigate from the outside, when you’re trying to understand as a PwC consultant, what am I actually gonna be doing? We have lots of answers to that in more detail information that we offer.
Tier 2 Consulting Firms
Finally the third sector are what we call tier two consultancies. And this is every boutique that you’ve ever heard of. This goes anything from the smallest, 20 person boutique, to two thousand, five thousand, ten thousand person boutiques. And even some very large international consulting firms, like Accenture, that are publicly traded.
All of these are in a different ballgame because they focus on one particular thing. And that one particular thing could be a very small thing, like the education sector, or it could be just private equity advisory, or it could be just startup tech firms that are bridging between B and C rounds. Or it could be just operations or supply chain. And each one of those focus areas mean that the common characteristic and this tier are that you, if you go there, are going to be doing a very similar type of work across all of your projects.
You really want to make sure when you go into one of the boutique firms, that you’re prepared not to be a generalist. That if they focus on Hospital improvements, that you are going to be working in hospitals. And your career expertise coming out of that experience is going to be improving hospitals. You want to make sure there’s alignment between what the boutique firms do, and what you are expected to do. There are a lot of questions that you might want to ask and make sure up before you go into boutique firms.
We do not have a stack ranking system where we say one firm is better than the other. In general MBB firms can be great optionality. But if you already know what you want to do, boutique firms can give you accelerated pathways to partner. If you don’t know what you want to do, and you want a lot of exposure‚ big four firms have so many different opportunities you can utilize from inside the practices. So, there are advantages to all of the types of firms. If you understand the differences between the consulting firms, it will help you navigate your application process. And ultimately, when you have multiple offers on the table, which most of our clients do, we have the fun practice of getting to advise them through which ones to take based on everything that they offer.
If you’ve got questions for us about consulting firm basics, consulting firm hiring practices, and differences between different kinds of consulting firms, we’d love to share. Reach out to us.