Is it time for the ‘Big Four’ to reassess who they’re competing against?
Zoologists and botanists often have to draw a distinction between scientific taxonomies and folk taxonomies. A folk taxonomy is a classification system that has emerged organically to suit the needs of ordinary people, rather than one constructed from the ground up based on scientific principles.
“Fish”, for example, is a folk taxonomy. There is no single evolutionary property that is shared by all fish. But even so, when you go to the fish market, you have a pretty good idea of what’s going to be on sale.
When discussing the landscape of professional services, we often fall back on these kinds of folk taxonomies. And among these taxonomies, there is none that sees such widespread and commonplace use as “the Big Four”.
However, while heuristics like this can be a useful way to help us understand the competitive dynamics of the industry, they can also serve to limit our thinking. Sometimes, when we take a step back from these mental crutches, we realise they were blinding us to the emergence of new realities.
Of course, the Big Four have always pitted themselves against a diverse range of competitors—particularly when it comes to advisory and consulting work. But recently, the term has started to feel like it does an even poorer job of capturing the competitive realities of modern advisory work.
The Big Four have all started to diversify their conception of what consulting actually is, and as a result, they have found themselves increasingly operating in the same orbit as businesses that they would never previously have thought of as competitors. We’ll have to update our heuristics and frameworks if we want to stand any chance of fully understanding the complex advisory landscape taking shape, and the new frontiers of competition that it will bring with it.
One major change—one that has been almost a decade in the making—has been the embrace of the “managed service” delivery model by the Big Four firms.
All of these firms have invested heavily in trying to create a new generation of managed services that combine their human capital with data and technology assets in order to provide clients with ongoing support in critical areas of their businesses. Their focus has not been so much on the traditional BPO space of payroll tasks, expense procedures, and so on; instead, they have been more interested in areas like analytics-as-a-service, real-time supply chain optimisation, and pricing-as-a-service.
Nonetheless, their attempts to wade into the territory of managed services have brought these firms into competition with both established BPO providers—such as Wipro—and technology providers like Salesforce, many of whom have their eyes set on that same nascent market.
The line between advisory firms, BPO providers, and technology companies feels less and less defined with every passing year.
But that’s only one part of the story. Because at the same time as they hurtle towards new competition with globe-spanning technology companies and BPO providers, the Big Four also find themselves squeezed from the other end of the market. More and more, the Deloittes and PwCs of the world are competing for work against boutique firms and tiny digital agencies—and, in some cases, even against hyper-specialist service providers like product design agencies and user experience designers.
Partly, this is a consequence of the way in which the Big Four have sought to expand their own footprints in their clients’ organisations.
These firms no longer want their clients to see them only as sage advisors and strategists; they want to be true end-to-end innovation partners. And in order to do that, they have had to expand the range of skills that exist within their organisations, developing—either through hiring sprees or acquisitions—capabilities in design thinking, innovation management, and related areas.
That means that clients grappling with the big challenges facing their organisations are often presented with a choice: Either bring in a Big Four firm that can give them access to all the necessary capabilities in one place, or work with a string of smaller agencies and freelancers, rotating them in and out as dictated by the needs of the programme.
One thing is clear: The Big Four now have a wider array of competitors than ever before. The term itself sometimes feels like a relic of a former era, more antiquated with every passing month. This new competitive dynamic will undoubtedly bring with it its own set of challenges; it won’t be easy, for example, to build a brand that can consistently go up against both huge BPO providers and specialist boutiques. But solving those challenges becomes a lot easier when you’re able to let go of your folk taxonomies and conventional wisdom, and start seeing the world for what it is.
By Fergus Blair of Source Global Research, a leading provider of research about the global professional services market.
