Upwork Lays Off 21% of Workforce as Stock Soars—What It Means for Freelancers

Big changes are underway at Upwork, the popular freelance platform. The company just announced it’s cutting 21% of its workforce, saying the move will make things run smoother and boost profits. The stock market loved the news—shares shot up by more than 25% right after the announcement. However soon-to-be former employees, and the freelancers who interacted with those employees on a regular basis, aren't as thrilled.

Why Is Upwork Cutting Jobs?

According to Upwork, the layoffs are part of a plan to simplify operations, speed up decision-making, and cut expenses. The company hopes that automating more processes and outsourcing certain tasks will save around $60 million a year.

Upwork is also sharpening its focus on enterprise clients—bigger businesses with larger budgets. They’ve brought in Ernesto Lamaina, an industry veteran, to lead this charge as the new General Manager of Enterprise.

A Busy Few Months for Upwork

This isn’t the first big news we’ve heard from Upwork recently. Here’s what else has been going on:

• Fall 2024 Updates: Just last month, Upwork rolled out a set of new features, including a chatbot called Uma (powered by OpenAI), video proposals, and a refreshed user interface. These moves clearly signal the company’s increasing reliance on automation and AI.
• Pressure from Engine Capital: An investor group, Engine Capital, which owns about 4% of Upwork’s shares, sent a letter to the board expressing frustration with the company’s performance. They called for changes that would boost profitability and unlock the platform’s full potential.

Positive Financial News Boosts Stock

Alongside the layoffs, Upwork shared a sneak peek at its third-quarter results—and things are looking good. The company pulled in $194 million in revenue, blowing past expectations of $179-184 million. Net income hit $43 million, a 71.4% jump compared to the same time last year.

Profit margins also climbed from just 1% in late 2022 to a solid 22% in Q3 2024. These strong results, combined with the restructuring, have given investors plenty of reason to feel optimistic, driving the stock up by more than 25%.

What Does This Mean for Freelancers?

While the company focuses on streamlining its operations and winning over bigger clients, many freelancers are left wondering how these changes might affect them. Here are a few potential ways things could shift:

• More Automation: Features like the Uma chatbot could mean fewer human interactions in customer support, making communication more automated.
• Changes to Community Groups: If Upwork reorganizes its groups or administrators, the way freelancers connect and collaborate might change.
• Focus on Bigger Clients: With more emphasis on enterprise customers, freelancers who rely on small or mid-sized clients might find fewer opportunities.

Yes I just heard about this. Didn’t know if it was true but didn’t want to post. Thanks for verifying. I just also heard they got rid of the people that ran the groups. As a Group Guide I’m curious how the Groups will play out. @MorganOMedia https://t.co/JXIEiUi04u

— Adam Palmer | FreelanceKing (@UpworkSaves) October 23, 2024

Upwork’s new direction is clearly geared toward boosting profits and staying competitive, but it’s also reshaping the platform’s future. For freelancers, these changes could mean adjusting to new tools, policies, and ways of working. Staying flexible and informed will be key as AI plays a larger role and enterprise clients become the center of attention.

What do you think about these changes? How do you see them affecting your freelance business? Drop your thoughts in the comments below—we’d love to hear from you!