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williamtcooper
Community Member

Upwork's Financial Results and Forecasts for 2023

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...

 

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91 REPLIES 91

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 ๐Ÿ™‚


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.

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.

"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). 

a1ebd38c
Community Member

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. 

Hi Peter,

 

You just restated my comments that less workers will be needed to get the same amount of work completed. ๐Ÿ˜

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.

Peter,

 

Again you restated my comments. Never said this is great - stated it as a fact. ๐Ÿ˜

Sorry, but don't understand why would freelancers then invest their time into learning all things AI, if the demand will decrease to 1/10 in 10 years? Wouldn't be rather more rational to freelance with the skillset they have as long as they can, while investing time and what they can earn into something that will - first, provide them "food on the table" and second, make them less reliant on the demand for workers, more independent economically? Instead of fighting and competing in a fight where AI takes all in the end.... Idk, it seems more logical and waaay more time efficient to invest into self-suficiency than to invest into learning AI.

So what exactly is your suggestion? I mean, how to invest in yourself and how to turn that into making money?

The best advice I can forge would be - use the time while you are making profits doing freelancing to invest into the means that will provide you and your family with necesarry products and existential minimum of off-grid termal/electric energy, once you are not able to make profits of freelancing anymore. That point will inevitably come sooner rather than later and when it comes, it wont matter much how much money do you have - the main problem will be lack of products and energy, since the recession will hit everyone. By providing yourself enough capital and know-how to produce enough for yourself, you will be able to "bring food on the table" which is the main reason why anybody is working in the first place. It is the first incentive when it comes to working, everything after that is building upon that foundation. If that many white and blue collar jobs will disappear, I really struggle to see any other outcome than really hard recession, shortages of basic goods and services, followed by social unrests and who knows what after that. 

By inability to acquire any income, one should focus on finding the means to satisfy basic needs WHILE one has opportunity to do so - once is over, it is over, if you didn't think about it, it will force you to react without thinking, which will most likely lead you to next mistake.

Do not take my advice literally, but what I would do is to rethink my position. If I am in the city, I would think about moving to country side, learning to grow basic goods and would definately buy some power generator, learn about it, how it works, how I can make it generate more power, stuff like that, so I can always have food, water and enough energy for appliances. All the AI hype is just to high to not take its full potential and that will lead to AI taking all the work eventually. Even if it is 90% as William suggested, or even "just" 80% or 70%, this will cause major economic hit without doubt and more importantly, it is more realistic to think that I wont be among those will "survive" - eventually, AI will take all anyways, year or five later, no big difference.

William offered the 90/100 as a pure hypothetical. He did not suggest that 90% of the workforce will lose their jobs to AI specialists. Will there be a lot? Yes. 90%? Not likely.

Jonathan,

 

It's too funny how some of the threads we are both posting in how we both get it. Must be a Texan thing. ๐Ÿ˜

Eventually, it will come to a choice do people want to have AI or they want to have economy. 

I think you give deep-learning algorithms too much credit. They can't do anything in the physical world, except function as data analyzers for sensory/feedback equipment.

In physical world you also have incentives and production is already close to non-existing in western economies, in other words west is importing already, dependant on imports. Luxury goods are in causal-consequential relation with white collar jobs, which are directly affected by AI - no white collars no luxury goods sales.  

Bruh, I work in manufacturing. Your claim that "production is already close to non-existing in western economies" is ludicrous. **Edited for Community Guidelines**.

You are working in a very specialized type of manufacturing, we'll see the impact on demand once white collar jobs start disappearing.

I enjoyed your conversation, your points of view are interesting.

 

I have my own opinion, I consider artificial intelligence and automation something absolutely necessary.

Without it our development and advancement as a civilization would be terribly stuck, it is totally true that this will generate collateral damage but if we want to continue advancing there is no other way out.

 

on the other hand anyone who does not want to keep up with the pace of technological progress as you rightly said can isolate themselves in the countryside, hunt and grow their own food or reduce their expenses with the use of cheaper energy, home hydroponics etc ...

 

The human capacity should be totally destined to creative, strategic and investigative tasks, we are nothing in the universe and we still know almost nothing about it, but I hope that this will allow us to answer someday so many questions, we have never stopped technological advances for those who do not contribute anything, we must seek solutions not problems.

 

We are very ambitious but that ambition is what has brought us to this point.

irvcfo
Community Member

When I graduated from high school, Key Punch Operators were the most sought-after skill set.  Life is change, and all of us will do what we have to do to keep up with it.

 

4b062031
Community Member

Thanks for the heads up

Mario,

 

You are most welcome!

jingleboy
Community Member

Thanks, William!

This summarizes what I was inquiring about. 

Thanks again!

Gustavo,

 

You are most welcome! If you have any questions, let me know. Have an amazing day!

alex-krieckhaus
Community Member

Thanks for sharing William. 

The message to me was: Start thinking about how you can use AI to increase your productivity as a freelancer, in my case as a finance writer. I've experimented with it and surprised how well it can create a first draft. There is no way (where AI is today) it could replace my work, but -- as they say -- it is always a lot easier to improve somebody else's work! In this case, maybe, AI could at least help us get some structure, basic facts, and an outline on a page, which we can then polish. Perhaps that only saves us 20% of our time on the project. But perhaps it is more, and perhaps it will grow. 

Put differently, I think our value remains: We can tell when AI is good and bad. So, use the good and fix the bad. 

Thanks again, 

Alex

Alex,

 

Learning to use AI to improve productivity and quality. That's the point. This needs to start now and fast, before other writers do so. So the early starters will always be ahead.

Alex,

 

You are most welcome!

 

Around 100,000 writers are using Jasper which is the writers AI tool.

 

Within 15 minutes I wrote a business plan including three years of financials just for the fun of it for a start up business idea. When I was in college, I created a similar scaled down tool for the Small Business Development Center, however it would still require several hours of work with the proper input. These new generative industry specific AI tools are already changing the landscape of business.

a1ebd38c
Community Member

๐ŸคฃYou made my day, Utku! All due respect to your expertise, but you marketing/financial guys are understanding only the part of consumer side of AI, without realizing its full potential. It is like having a race around the world against light particle ๐Ÿคฃ Or trying to catch the light with lasso in try to subdue it to your control and stop it from winning the race ๐Ÿคฃ

a1ebd38c
Community Member


โ€œโ€ฆwe currently have a significant surplus of talent in relation to the number of clients actively engaging talent for most categories of services on our work marketplace. As a result of this surplus, we primarily focus our efforts on retaining client spend and acquiring new clients, as opposed to acquiring new talent and retaining existing talent."

This is also from report 2022 and it demonstrates what they intend to do and are doing, so you can put effort but it is going to be futile.

a1ebd38c
Community Member

The funniest thing of all is that this started as freelance platform, a place that gathered creative and capable people who wanted to escape corporate life and corporate jobs, but what it became is an uneficient corporation with tons of rules that needs slavelancers, not freelancers, while operating in almost command market conditions. Upwork not only became its antipode, but became politically oriented, which is always bad for business.

williamtcooper
Community Member

New Updates:

 

Many of the clients are receiving 50+ proposals within 24 hours regardless if Boosted or not in 2023. Only about 50% jobs posted will result in a hiring. All else being equal that is only a 1% chance of the average freelancer getting hired. Of course Top Rated freelancers have a better chance, however the point being made is things are very competitive this year.

 

During any given quarter on Upwork there are 4,000,000 active freelancers and 800,000 active clients. Therefore all else being equal, the average freelancer has a 20% chance of getting hired ONCE per quarter.

 

Basically Freelancer Supply > Client Demand

 

In the past 3 months, I have been hired for around 40+ projects, however I have adjusted my Strategy to match the changes on Upwork's algorithm, the weak macro economy and the AI revolution.

It sounds like the competition on Upwork has become quite intense in 2023. With clients receiving 50 or more proposals within 24 hours, it's not surprising that only about 50% of the jobs posted result in a hire. And for the average freelancer, it's only a 1% chance of getting hired. That's definitely a tough market to compete in.

 

It's interesting to hear that there are 4 million active freelancers on Upwork and only 800,000 active clients. That certainly makes the supply of freelancers higher than the demand from clients. And it's good to know that, all else being equal, the average freelancer has a 20% chance of getting hired once per quarter.

The economy is the major issue in 2023, however AI generate tools will be the next leg in the second half of the year going forward that will take a bite out of the next for anybody other than Expert freelancers. Upwork will be under the most pressure ever during 2023 to change to fit the sign of the times.

Hi Alex,

 

That usually happens for two main reasons. Either the cover letter isn't converting and / or the submission didn't make the client's post very well. The information below will help:

 

COVER LETTER: Create a flexible cover letter that is less than 100 words. Long cover letters rarely get read, but instead are ignored. Break the cover letter into four sections. Section 1 : Acknowledge the job that you are applying for such as "Looking forward to discussing your graphics design project". Section 2: Highlight your validations stamps IE skills that are brought to their project. Section 3 Explain how you will solve their problem and the final section request an Upwork Zoom call to discuss their project.

 

JOB SUBMISSIONS: Tips - Only apply to Jobs that you are highly qualified, don't Bid for the top 3 spots unless you are an exact match and have a high probability of getting the job, don't immediately apply for jobs, but instead wait at least a few hours so your bidding is more accurate, don't get into bidding wars because serious Clients will view most applicant's cover letters, don't apply for Jobs that have 20 - 50 applicants in less than 24 hours. If a Client gets 50 cover letters, there is only a 2% chance of being hired; bad odds. I set my freelancer sort to apply for jobs with less than 20 proposals.

William, I'm curious to know if you have some insight into how many long-term contracts there are on Upwork?

 

From the 800,000 active clients, how many active contracts do they have? (One active client may have multiple contracts)

 

Of those, roughly what percentage are long-term?

 

I once read a comment from a tenured freelancer on the platform, that actual active freelancers / contracts is much lower than advertised. (Something like 100,000 big earning freelancers if I remember correctly)

 

Do you think UW earns more from that consistently contracted, high-earning group of freelancers, or do they earn more from the lower earning, short-term contracted freelancers?

 

What numbers do you estimate?

Bilal,

 

I can make educated guesses based upon some of the facts and using intuition, but want to make it clear these are not Upwork's offical numbers, but instead best guesses.

 

During the annual stockholder meeting, it was stated that in 2023 Upwork got 40,000 clients to signup for longer term engagements and it was one of several focuses for the company this year. Draw your own conclusions.

 

Typically on these types of sites $25,000 annually or higher places a freelancer in the top 1% of earners. If Upwork has 4,000,000 active freelancers, than the top 1% is 40,000 so called larger freelancers. However, a freelancer can have 100 $250 clients to make $25,000 or one $25,000 client. Draw your own conclusions.

 

There are legal, management, HR, investor, and other considerations for bringing a freelancer off of Upwork at the two year mark. I find it dubious that too many clients will risk those considerations for only a 5% Upwork fee. I most certainly wouldn't if I was back in corporate America.

Thank you William. This definitely helps in creating a picture, and drawing conclusions, albeit based on best guesses.

 

UW doesn't share the breakdown of revenues, so we can't say for sure, and I strongly feel the real situation would be very interesting.

 

PS: I didn't say this was about going off platform, but appreciate your insight on that as well. ๐Ÿ˜‰ 

fab93900
Community Member

Hi William I am very new here and would love any suggestions. 

Hi Lindsay,

 

Below are some BEST practices plus the Academy link at the top of the page:

 

PROFILE: Always complete your Upwork Profile before applying for Jobs. Create a synergized Title, Summary, and Skills to apply for Jobs to match what Clients are searching for. Use one or two of the Skill keywords in the Title to emphasize what you bring to the table for the Client. Create 4 short paragraphs in the Summary. If the Summary is too long, most Clients will not read the rest of the Summary; too short then there isn't enough information for a Client to hire. The first two sentences of the Summary are the most important because they are visible to the client as they search for a freelancer. Use all 15 Skills IF they apply. The Skills are used to assist a Client in locating your Profile via search. Add your Portfolio and always use a colorful image. Consider adding a Project Catalog if it applies. Use a short sentence description for each Employment entry. By the way, it goes without saying make sure that your Profile Settings are on Public not Private so others can view the Profile.

 

COVER LETTER: Create a flexible cover letter that is less than 100 words. Long cover letters rarely get read, but instead are ignored. Break the cover letter into four sections. Section 1 : Acknowledge the job that you are applying for such as "Looking forward to discussing your graphics design project". Section 2: Highlight your validations stamps IE skills that are brought to their project. Section 3 Explain how you will solve their problem and the final section request an Upwork Zoom call to discuss their project.

 

JOB SUBMISSIONS: Tips - Only apply to Jobs that you are highly qualified, don't Bid for the top 3 spots unless you are an exact match and have a high probability of getting the job, don't immediately apply for jobs, but instead wait at least a few hours so your bidding is more accurate, don't get into bidding wars because serious Clients will view most applicant's cover letters, don't apply for Jobs that have 20 - 50 applicants in less than 24 hours. If a Client gets 50 cover letters, there is only a 2% chance of being hired; bad odds. I set my freelancer sort to apply for jobs with less than 20 proposals.

William, 

Thank you much for your expertise and words of encouragement. I only wish I had not missed this before I bid on my first job ๐Ÿ˜… which I am more than qualified. I had no idea what  bid for the top 4 spots were until I realized it was way more than the 6 connections it said but live and learn right! I am excited to be here and meet new talented people. I just need to come up with a way to showcase some of my work as most recently working in Consulting and can't exactly provide Client Specific Account details.

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