Thanks for the shoutout! Glad my comment on A&M and AlixPartners resonated and helped spark this deeper dive.
Would also be curious to get your thoughts on alternative business/staffing models a firm may present and how compelling they are for you as a buyer. I've seen the following models come up in RFPs:
- Subcontracting: Firm subcontracts to an operator/specialist as an SME to the engagement team
- Boutique: Former Big 4 / MBB partners starting specialist firms. It seems to be a popular model now for clients wanting to buy from a specific partner while avoid a big firm's price tag
Vince, thanks for always great engagement. And useful comments. This now could be a spark for another deep dive in the future :)
As for your question, I'm afraid we will again give an uncommon and a bit skeptical answer:
Subcontracting is common. And we regard it with suspicion. The typical setup is a Big 4 firm listing an operator or specialist as a "subject matter expert" on the proposal, with a day rate and a defined number of days. In practice, that person shows up for the kick-off, contributes to two or three working sessions, and has no authority over the engagement team's actual output. SMEs are there to pad the CVs section of the proposal. We have never seen, either as partners or as buyers, external SMEs being given the authority to actually control the quality of delivery. Which makes sense considering everything else we wrote - if the engagement economics is the primary objective for the engagement partner, they would never give away that control to an external party. So almost inevitably the client ends up paying Big 4 rates for an engagement whose most valuable participant is a contractor with no decision rights. When we see this model in a pitch, our first question to the firm is: "What happens to the deliverable quality on the days your SME is not in the room?" The answer is usually silence or a pivot to the team's "methodology."
The subcontracting model also tells you something unflattering about the firm. If the capability the client asked for can only be sourced outside the partnership, the firm is conceding that it does not possess the expertise it is selling. That is a pricing conversation the firm does not want to have.
Boutiques are a different proposition. A former Big 4 or MBB partner who starts a specialist firm is doing exactly what the operator paradox predicts: leaving because the model would not accommodate what they do, then building something where their expertise is the product rather than the accessory. From the buyer's side, boutiques can be compelling for the right mandates. You know exactly who is doing the work. The principal is the product. Fee structures are lower because there is no leverage pyramid to feed.
The trade-off is real: boutiques cannot staff a 60-person implementation, they carry less brand insurance (the "nobody got fired for hiring McKinsey" factor still operates), and their infrastructure is thinner. For large-scale execution, the Big 4 still have a role. But for the advisory and restructuring mandates where operator judgment is what the client is actually buying, boutiques are winning an increasing share precisely because they solved the retention problem by building around the operators instead of bolting them on.
Both models are workarounds for the problem the article describes. The Big 4 cannot retain operators, so the market invents mechanisms to route around that failure. Subcontracting rents the expertise the firm could not keep. Boutiques are built by the people the firm pushed out.
One counter-trend worth noting, because it reverses the usual power dynamic: we are starting to see specialist boutiques priming engagements and subcontracting the Big 4 as delivery capacity. Not the other way around. This would have been unthinkable five years ago. The Big 4 brand identity has always resisted being anyone's subcontractor; the name goes on the cover page, the name owns the client relationship, the name sets the fee. But in pockets where the market is tight and the expertise gap is obvious (deep tech, certain regulatory specialisms, AI implementation where the client can tell within ten minutes whether the team has built production systems or just read about them), some of the smarter partners are accepting those arrangements rather than pretending the firm has capability it does not. The boutique brings the expertise. The Big 4 brings the infrastructure and the bench. The client gets the operator judgment they wanted and the execution capacity they need. When it works, it is genuinely the best outcome for the buyer, and we hope it becomes less of an exception.
Thanks for the shoutout! Glad my comment on A&M and AlixPartners resonated and helped spark this deeper dive.
Would also be curious to get your thoughts on alternative business/staffing models a firm may present and how compelling they are for you as a buyer. I've seen the following models come up in RFPs:
- Subcontracting: Firm subcontracts to an operator/specialist as an SME to the engagement team
- Boutique: Former Big 4 / MBB partners starting specialist firms. It seems to be a popular model now for clients wanting to buy from a specific partner while avoid a big firm's price tag
Vince, thanks for always great engagement. And useful comments. This now could be a spark for another deep dive in the future :)
As for your question, I'm afraid we will again give an uncommon and a bit skeptical answer:
Subcontracting is common. And we regard it with suspicion. The typical setup is a Big 4 firm listing an operator or specialist as a "subject matter expert" on the proposal, with a day rate and a defined number of days. In practice, that person shows up for the kick-off, contributes to two or three working sessions, and has no authority over the engagement team's actual output. SMEs are there to pad the CVs section of the proposal. We have never seen, either as partners or as buyers, external SMEs being given the authority to actually control the quality of delivery. Which makes sense considering everything else we wrote - if the engagement economics is the primary objective for the engagement partner, they would never give away that control to an external party. So almost inevitably the client ends up paying Big 4 rates for an engagement whose most valuable participant is a contractor with no decision rights. When we see this model in a pitch, our first question to the firm is: "What happens to the deliverable quality on the days your SME is not in the room?" The answer is usually silence or a pivot to the team's "methodology."
The subcontracting model also tells you something unflattering about the firm. If the capability the client asked for can only be sourced outside the partnership, the firm is conceding that it does not possess the expertise it is selling. That is a pricing conversation the firm does not want to have.
Boutiques are a different proposition. A former Big 4 or MBB partner who starts a specialist firm is doing exactly what the operator paradox predicts: leaving because the model would not accommodate what they do, then building something where their expertise is the product rather than the accessory. From the buyer's side, boutiques can be compelling for the right mandates. You know exactly who is doing the work. The principal is the product. Fee structures are lower because there is no leverage pyramid to feed.
The trade-off is real: boutiques cannot staff a 60-person implementation, they carry less brand insurance (the "nobody got fired for hiring McKinsey" factor still operates), and their infrastructure is thinner. For large-scale execution, the Big 4 still have a role. But for the advisory and restructuring mandates where operator judgment is what the client is actually buying, boutiques are winning an increasing share precisely because they solved the retention problem by building around the operators instead of bolting them on.
Both models are workarounds for the problem the article describes. The Big 4 cannot retain operators, so the market invents mechanisms to route around that failure. Subcontracting rents the expertise the firm could not keep. Boutiques are built by the people the firm pushed out.
One counter-trend worth noting, because it reverses the usual power dynamic: we are starting to see specialist boutiques priming engagements and subcontracting the Big 4 as delivery capacity. Not the other way around. This would have been unthinkable five years ago. The Big 4 brand identity has always resisted being anyone's subcontractor; the name goes on the cover page, the name owns the client relationship, the name sets the fee. But in pockets where the market is tight and the expertise gap is obvious (deep tech, certain regulatory specialisms, AI implementation where the client can tell within ten minutes whether the team has built production systems or just read about them), some of the smarter partners are accepting those arrangements rather than pretending the firm has capability it does not. The boutique brings the expertise. The Big 4 brings the infrastructure and the bench. The client gets the operator judgment they wanted and the execution capacity they need. When it works, it is genuinely the best outcome for the buyer, and we hope it becomes less of an exception.