Upwork's Financial Results and Forecasts for 2023

[#1]

I just attended Upwork's Stockholders annual meeting for 2022 and their forecasts for 2023.

It was a very interesting meeting and below are my takeaways from the meeting in no specific order. Feel free to ask any questions.

- In 2023 40,000 Clients have signed up for longer term hiring on Upwork and 2,000,000 Freelancers.

- Upwork lost $89.9 million dollars in 2022 with a possibility of becoming profitable in the second half of 2023.

- The current focus is to generate more revenue from existing clients versus adding new clients in the first half of the year.

- Clients are taking longer to make purchasing decisions due to the macroeconomic conditions.

- Marketing spend will drop 12% in 2023.

- Companies are in Phase 1 of 3 phases of economics. In English - companies are scaling back and are cautious.

- Upwork is very excited about AI and stated that during the past 4 months AI posts are up 39 x!

- Upwork stated clients are purchasing from freelancers that produce their work using AI because it reduces client costs.

- Indirectly stated skilled freelancers are in more demand and less skilled in less demand.

- Upwork sees the first half of 2023 as challenging and the second half to be better based upon their enterprise sales team.

My takeaway is that freelancers need to be incorporating AI and expert level Skills or risk being less in demand. Expect the first half of this year to be slower due to the economy. AI and the economy have taken the show for the next six months.

This is a recently written Post with the SECRETS to growing your Upwork Sales at:

https://community.upwork.com/t5/Coffee-Break/THE-Secrets-to-Growing-Your-Upwork-Sales/m-p/1229943#M5...

This is a recently written Post with the SECRETS to hiring freelancers on Upwork at:

https://community.upwork.com/t5/Clients/SECRETS-to-Growing-Your-Business-On-Upwork/m-p/1235553#M8984...

[#2]

Both can be true. I think it'll be the intermediate-level freelancers who'll struggle the most, not the entry-level ones who can compete on price. AI can't replace people who have years and years of experience and can advise, strategize, plan and be creative, as opposed to people who can merely execute a task (however talented they may be). There's such a shortage of experienced workers in the UK that the government is actively trying to persuade boomers to come out of retirement, since Gen-Xers like myself are a comparatively small percentage of the population and can't replace all the retirees. I'm not worried about having lots of good opportunities in the near future... just maybe not via Upwork, if current trends continue.

[#3]

Ah, so now I see why the new shill bidding crap being added to bid on projects... Upwork is in financial trouble and we're all paying for their mistakes. Now clients will only see the top three people who were willing to throw their money at Upwork to bid on a project, rather than seeing a good cross-section of freelancers to choose from. Does Upwork notify clients that they are now being funnelled into seeing only those idiots who throw their money at projects, rather than provide high quality work in a proven portfolio? Have now spent 3x the amount on credits in the first two weeks of February with only one additional $200 project. The response is now so unbelievably pathetic it is no longer worth using Upwork - it is no longer a relevant source of work. i could never keep a client on Upwork, one project and then they said they would never use it again, ever. Some are now valued clients of mine. And then Ai... ok here's what I have on Ai... a client of mine from five years ago off Upwork contacted me a few months ago to completely overhaul all of their marketing, possibly driving their marketing for the next 4-6 months, all because one of their CEOs put their site through Ai and it mistakenly thought they were a crypto-currency company. So,, yeah, you invest all your efforts in Ai and a get a logo that is an ill-informed mish-mash of 10,000 similarly-named companies from a pool of web crap and that's what you want? And has anyone see the news on Microsoft and just how pathetic Bing on Ai is? - completely laughable. Yes, Upwork, invest heavily in Ai, it's the future. Upwork is a race to the bottom. Always has been, always will be.

[#4]

Upwork has always been in financial trouble. That wasn't new in 2022, or even in 2021 when they beta-tested the Boosting system.

[#5]

Have you actually used the new Bing? Seeing as it is free to try, I don't see why you would rely on "news" (read: bias/propaganda) articles to formulate your opinion.

[#6]

I love the new AI tools such as ChatGPT since they tend to augment work and give ideas and concepts. The tool is not perfect, but conceptually solid.

I read in The Economist magazine that 100 million people are now using ChatGPT.

There is absolutely no doubt in my mind that once ChatGPT-5 comes into play that most of the entry and intermediate jobs will be in much less demand and Experts will be the rage. It's occuring already on this site with ChatGPT-3.5.

[#7]

I actually applied to a job the other week that had numerous increased bids without increasing mine (like you, I don't like that concept)...and I got the job. 

[#8]

Exactly this. I refuse to buy connects and upwork is no longer a profitable platform for me. My niche is bioinformatics and even in topics where I know talent is really really scarce I see 20-50 bids. I can't and I don't want to compete with that

its pathetic, also for the clients, since they don't get the freelance skills they are seeking for 

[#9]

If you follow job posts on upwork, you'll quickly notice some fraction of those are buzzword hype posts. These are easily excited people looking to be the first or profit from a hype which the dont have much in-depth knowledge about.

once it was onlyfans clone when they heard of was going to ban nsfw content, and some other time it was crypto bots to make faster than everyone trades and some other time it was launching nfts or coins. Now its ai.

So theres "interest" in ai because its hyped. It doesnt directly mean there's money in ai related jobs on upwork. Actually its probably the opposite.

[#10]

Alper,

The new AI tools are real and extremely helpful. I am a micro influencer on LinkedIn (36,000 CEOs Followers) and other Upwork competing sites and the amount of AI related work is exploding. The CEO of Upwork and the financial analysts on Wallstreet comments on AI is only a comfirmation of I what I have been experiencing for the past three months.

Real examples of projects I have been on in the past three months include using AI for fintech, SaaS. computer coding, sales copywriting, articles, social media idea creation, etc. etc. Most of the 40+ projects I have been hired for on Upwork in the past 3 months involved some sort of AI with Expert industry and skill knowledge.

It is extremely clear from my direct client experience that by the time ChatGPT-5 arrives that many of the entry and intermediate jobs will be in less demand and Expert work will explode. It is already occuring on Upwork; just view all the compliants about freelancers stating that they are receiving little to no new client jobs.

[#11]

Thanks for sharing your experience, theres no way i can argue with what you see. Yet i filter out all buzzwords to find actual job posts in the haystack. I believe quickesr way to ruin your profile is to take jobs with the title "need an ai expert asap"

[#12]

You are right about on Upwork that there is not much left in the job postings for real AI jobs.

The AI posts are coming to me directly via Invites (160 so far in 2023, Talent Scouts, and Consultations). 

Many of the clients realize that they need an industry and skill Expert that knows about AI and how to specifically apply to their exact situation. They are bypassing open posts, but instead going directly to the Experts. It is a major reason along with the weak maco economic conditions that there are hundreds of freelancers complaining of not receiving any or few job offers this year. 

[#13]

It's clear that Upwork has made significant progress over the past year, despite the economic challenges posed by the pandemic. The fact that 40,000 clients have signed up for longer-term hiring on Upwork is a testament to the value that the platform provides to businesses seeking skilled freelance talent. Additionally, the increase in AI adoption by freelancers on the platform is a promising development that reflects Upwork's commitment to staying at the forefront of technological innovation.

It's also encouraging to hear that Upwork is taking a strategic approach to generating revenue from existing clients, as this shows that they are focused on building long-term relationships with their customers. While the first half of 2023 may be challenging, it's clear that Upwork has a strong enterprise sales team and a plan in place to weather the economic uncertainty.

Overall, I believe that Upwork has a very promising future. The fact that they are constantly innovating and adapting to changing market conditions bodes well for their long-term success. As the demand for skilled freelance talent continues to grow, Upwork is well-positioned to meet the needs of businesses and freelancers alike. I'm excited to see what the future holds for this innovative platform!

[#14]

What do you think the future holds for the Entry level Skilled?

[#15]

The future for entry-level skilled workers in the freelance market could be both promising and challenging. On one hand, the demand for freelance talent is expected to continue to grow, driven in part by the shift towards remote work and the rise of the gig economy. This could create more opportunities for entry-level skilled workers to showcase their skills and build their portfolios.

However, the competition in the freelance market can be intense, especially for entry-level workers who are still building their reputation and portfolio. In addition, the pandemic has brought economic uncertainty that may impact the job market and freelance opportunities.

To succeed in the freelance market, entry-level skilled workers will need to focus on developing their skills, building their portfolio, and establishing their reputation. They may also need to be flexible and adaptable in their work and pricing to remain competitive in the market.

Platforms like Upwork can be helpful for entry-level skilled workers by providing access to a large pool of potential clients and offering tools to showcase their skills and build their reputation. Upwork also offers educational resources and support for freelancers, which can be especially valuable for those who are just starting out in the freelance market.

While the future for entry-level skilled workers in the freelance market may present some challenges, there are also opportunities for those who are willing to work hard, develop their skills, and remain adaptable in the face of changing market conditions.

[#16]

Utku,

My takeaway from the annual meeting is that Entry level and Intermediate jobs will be in less demand which can be seen by viewing all of the "I can't find a job on Upwork" complaints in the Community. It's already happening.

AI is enhancing the accuracy and speed of the Experts, therefore making them less costly to clients.

[#17]

Hi William,

This is absolutely true. So in the short term, AI will disable lower and mid-tier talent. But the top talent will continue to win.

However, there is a situation, which I observe that most people either don't see or ignore, that freelancers with lower and mid-tier skills who will no longer get jobs can develop skills on how to use AI tools 🙂

In this case, the question may arise; okay, but learning how to use AI is not a skill!

This is a big misconception. Because this will soon become a real skill. Prompt specialization and Prompt engineering, which have already started to rise, have started to give signs in this regard. On the platforms on the internet, you can come across job postings such as ChatGPT expert wanted, Prompt expert wanted etc.

In other words, those who are afraid of losing their jobs because of the emergence of AI can already get ahead of others if they are quick on their feet in the specialization of using AI.

And the big news is that while AI can end many jobs, it can also create more jobs than it ends 🙂

[#18]

Utku,

If there are 100 programmers and now 10 programmers can do the work of 100, 90 programmers lose their jobs. This is already happening in many professions. The 90 programmers come to Upwork, however because clients are laying off programmers, clients don't need programmers from Upwork unless it is at an Expert level in a unique in-demand field.

It's a massive net loss of jobs by the end of this decade.

AI takes the white collar jobs and robotics will take the blue collar jobs.

During the 100 year industrial revolution, 80% of the people were farmers and today 6%. That was a loss of farm jobs to new white collar and blue collar jobs. There are no other category of jobs to go to and this change will take 10 years not 100 to 200 years to occur. People can't absorb change at the rate of an AI computer and a robot.

[#19]

William,

Let me give you an example. When sewing machines were first introduced, we can say that most of the tailors lost their jobs. The master tailors were still able to find customers. But some of the lower and middle level tailors who lost their jobs, not all of them, but a significant number of them quickly learned how to use the sewing machine and started to produce clothes just like the master tailors. In other words, some of the new lower and middle-level seamstresses survived the difficult transition process by learning to use the sewing machine, and thanks to the sewing machines, they were able to produce quality products like the master tailors. In other words, they closed the gaps in their skills with technology.

Here, too, those who quickly learn to use this technology from the lower and middle levels, where AI will finish them off, will be able to combine their own skills with AI's skills and do as good a job as the experts of this business. In other words, unfortunately, only a small number of the lower and middle ranks will be able to combine their own skills with AI's skills.

So this is the key point: The faster you can combine your skills with the capabilities of AI technology, the faster you will overcome this process and take your place in the new working world. But I don't think many people will be able to do that.

So as you say, many people will lose their jobs in 10 years, but not all 🙂

[#20]

Good perception👍 Just like when computers were first introduced instead of getting trained to use it, so many were against because of the fear of losing jobs. And see its outcome today.

[#21]

---

Utku S wrote:

Additionally, the increase in AI adoption by freelancers on the platform is a promising development that reflects Upwork's commitment to staying at the forefront of technological innovation.

---

Is it a promising development, though? Quoting William, "Upwork stated clients are purchasing from freelancers that produce their work using AI because it reduces client costs" (emphasis mine). That could mean that, for example, writers who spin content using ChatGPT for $12/article are in more demand than writers who can create original content, and freelancers who use automated logo generators and charge $5/design are in more demand than designers with actual skills.

[#22]

The increase in AI adoption by freelancers on Upwork is a noteworthy development, but as the commenter rightly points out, it may not necessarily be an entirely positive trend. While AI can certainly help improve efficiency and reduce costs, it's important to consider the potential implications of relying too heavily on it.

For example, the use of AI-generated content can result in a lack of originality and quality, which may ultimately impact the brand image of the client's business. Similarly, automated logo generators may result in generic designs that fail to accurately represent the client's brand identity.

That said, it's worth noting that the demand for skilled freelancers who can produce high-quality original work is still strong. While some clients may be attracted to the lower costs associated with AI-generated work, others recognize the importance of investing in quality talent to ensure the best possible results for their business.

It's encouraging to see that Upwork is taking a strategic approach to generating revenue from existing clients, as this suggests that the platform is focused on building long-term relationships and delivering value to both clients and freelancers. The fact that Upwork is constantly innovating and adapting to changing market conditions bodes well for its long-term success.

While the rise of AI adoption on Upwork may raise some concerns, it's clear that the platform remains a valuable resource for businesses and freelancers alike. As long as there is a continued demand for high-quality original work, skilled freelancers who prioritize delivering value to their clients will continue to be in demand, regardless of the specific tools or techniques they use to produce their work.

[#23]

"It's also encouraging to hear that Upwork is taking a strategic approach to generating revenue from existing clients, as this shows that they are focused on building long-term relationships with their customers."

This depends entirely on your business model. What it says to me is that Upwork will become increasingly useless to me and other highly-skilled freelancers. I have long expected this, as Upwork can make more money with fewer resources by providing a large number of mid-level employee-like "freelancers" to one company than by servicing the clients who come here looking for a specialized skill that they don't have in-house but may only ever hire that one freelancer (despite that freelancer's rates being significantly higher). 

[#24]

I have rather different conclusions about everything you stated. Will try to be concise and straightforward as possible. I will paraphrase couple of your references and take that as starting axiom:
AI software is helpful and reduces costs for clients. Clients are adopting AI and lay off workers (programers mostly) who don't incorporate AI, replacing multiple workers with one worker who can efficiently use AI (by your words Ai is already taking both blue and white collar jobs - 9 out of 10 will lose their job). Upwork is excited by the whole AI hype. 

I'll assume the axiom above is true and explain how I see the situation will further develop.

Clients will reduce their costs by laying workers off. Those workers that lost their job will maybe try to keep the pace and learn to use AI themselves, but the overall demand for workers will decrease, which will leave majority of those trying to keep the pace still jobless. This will highly reduce their purchasing power and reduced purchasing power of (former) white and blue collar workers will affect the end revenue of the clients. How? I think you can pave that road yourself - those people who were formerly white and blue collar workers won't have money to spend on products and services clients are providing. The revenue of the clients decreases, clients have to reduce their costs further and start laying off even essential workers, closing store places, decreasing the amount of services. It is not hard to recognize the RECESSION - very hard recession that is already under way. Digital baloon will explode in the end, AI will eat itself and what started as significantly decreasing costs will lead to significantly decreasing revenue and financial results with loss. Upwork is just one more example, but the recession is obvious wherever you look. By cutting itself from ability to produce cheaply, western economies created digital bubble and things like Upwork bring income only when clients are able to provide services for THOSE WHO PRODUCE - when that is cut off by regulation and high costs, simply there are not enough PRODUCERS who need some kind of services. 

[#25]

Hi Peter,

You just restated my comments that less workers will be needed to get the same amount of work completed. 😁

[#26]

Yes, but as long as you see it as good thing,  I outline why it is a bad thing even for the clients in need of that work. Just wait until your work is replaced with couple additional lines of code, it really is not impossible. But, what it will all produce doesn't benefit clients,  since if the numbers you have given (9/10 layed off from work) are true, that means only 1/10 of the demand for work will remain, making it obsolete for freelancers to try incorporate AI into their work, since their work wont be needed nonetheless. Since AI is taking  so much jobs,  it can't but not to affect revenue of the clients - who buys products and services if not workers? Workers without income don't buy anything, so you have to recalculate your gains and losses with that in mind, not only in terms how much money is needed to make something.