Upwork Layoffs in May 2026: When the Freelance Giant Started Looking Like Its Own Customers

At Upwork’s Palo Alto headquarters, there is a certain kind of irony that is difficult to ignore, but no one will publicly acknowledge. A company that was founded solely on the notion that human labor is abundant, in demand, and valuable to connect across borders has recently announced that it will lay off about 25% of its own employees. On May 7, the memo was distributed. Many people who had been following the platform for years were left wondering what the new pitch was supposed to be after the stock fell by nearly 20% by the following morning.

Hayden Brown, who has been in charge of Upwork since 2020, described it as a “tough call” and stated that she took full responsibility for it. Anyone who has read enough of these letters will recognize the content, even though the tone and phrasing were deliberate. 145 employees, or roughly 24% of the workforce, have left. restructuring costs that primarily affected the second quarter and ranged from $16 million to $23 million. Naturally, AI was described as a type of weather system that the business is adjusting to rather than as a tool.”As AI develops, the nature of work continues to change, and we continue to build Upwork for where work is headed,” Brown wrote.

The phrase “two pizza teams are dead” is what really resonated with me. A team small enough to be fed by two pizzas is the old Amazon concept. Even that, according to Brown, is now too big. She says AI makes it possible for smaller teams to hit harder. Reading the memo gives me the impression that she really thinks this. Additionally, there is a feeling that no one in the building is entirely certain of how things will turn out.

The percentage is not what distinguishes this round from the 2024 cuts. It’s the background. Upwork’s own clients, the companies that hire independent contractors, are withdrawing. Erica Gessert, the CFO, told analysts that clients at the lower end of the market are discreetly moving away from hiring people for jobs under $500 and toward AI tools. It’s a tiny piece of information with big consequences. In response to the platform’s real-time observation of its own product being partially replaced, the business is using the same technology to reduce its own workforce. It has an almost recursive quality.

It wasn’t helped by the week itself. On the same day, Cloudflare eliminated over 1,100 jobs. Earlier this week, PayPal announced 4,760 cuts. Coinbase, Freshworks, and BILL Holdings all moved within the same time frame and mentioned AI in their justifications. The comment sections on Reddit and X became a familiar blend of skepticism and dark humor. One thread openly questioned whether businesses were now vying to fire employees the quickest. Another noted that, even though both are likely true, blaming AI is a tidier narrative than blaming low customer demand.

It’s difficult not to interpret Upwork’s stock closing at $8.73 after hours, down 18%, as the market’s silent assessment of the AI-savings story. This script is not new to investors. Before they believe the story, they want to see an increase in the margin in the Q2 results. Probably more painful than the layoffs themselves was the reduction in revenue guidance, which went from $835–$850 million to $760–$790 million. A reduction in the workforce can be framed. A $75 million haircut can’t really be framed on the top line.

As this develops, it seems as though Upwork is in an uncomfortable middle phase. Not thriving, not failing. The company reported a profit for the first quarter. Revenue continued to increase annually. However, the growth narrative has evolved into something more conditional and cautious. Brown discusses an evolving business and a “refounding” in 2025. To be honest, it’s still unclear if that turns out to be a true turnaround or just a lead-up to another announcement in the spring. The portion of the story that has already been written is the 145 individuals who will be informed next week.