Platform circumvention has been estimated to cost Upwork between $325 million and $333 million in GSV annually. Annual revenue upside for the complete elimination of circumvention based on these estimates, is approximately $50M (assuming 15% take rate and 100% retention). Since 2021, the rate of circumvention among talent has declined due to anti-circumvention and anti-scam investments, though the estimated cost remains approximately the same, due to increased value per contract.
How is circumvention measured? Because circumvention occurs off-platform, we are unable to measure its frequency through platform reporting tools, nor directly view most examples of how/when/why circumvention occurs. Additionally, customers rarely self-report circumvention for fear of suspension, so Upwork relies on 3rd party vendors to run anonymous user research and estimate the frequency and impact of circumvention. The last two research projects were conducted in Q4, 2021 and Q1, 2023 and resulted in high-level learnings about circumvention drive and in the cost estimates provided above. Volume and insights from internal operations and customer support teams give no reason to dispute the vendor estimates.
Real-time attribution of value to any anti-circumvention initiatives is challenging because it is not directly measurable on our platform, but we can seek to understand and disrupt circumvention drivers which we would expect to then reduce the frequency of occurrence.
1. We do not provide enough education to our customers associated with the risks of taking the conversations outside of the platform, or benefits of staying on the platform.,
2. We do not inform our customers adequately about the impact of sharing contact information directly.
3. Customers are often unaware of Upwork’s anti-circumvention policies or the consequences of violating them. They are also frequently unaware of how to identify and report attempted circumvention.
Educating our customers both Client and Freelancer about the relevant terms of service and policies that talk about keeping the subsequent jobs on the platform and showcasing the benefits of maintaining the contract on Upwork will prevent some customers from moving off platform to continue their engagement. It will also create more robust self-policing that further discourages/prevents circumvention behaviors.