Bruce Eckel has writte a very thoughtful piece about the economics of consulting companies (be sure to read the comments as well).

My opinion has always been that there’s a natural limit to a company’s size if a goal is to maintain quality. Once the number of people who work in the company becomes large enough, it’s going to become representative of the population and you’ll end up with a Gaussian bell curve: A few great people, some idiots, and a large amount of folks with mediocre skills in the middle.