Upwork Cuts 1 in 4 Jobs, CEO Says AI Is Changing Work

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On May 7, 2026, Upwork announced it was cutting approximately 24% of its workforce, about 145 jobs out of a 600-person headcount. 

The company that built its entire business helping people find work has decided to eliminate the jobs of roughly one in four of its own employees, and it's blaming the changing nature of work for doing so.

Upwork’s 2026 Layoffs Explained

The announcement came on the same day the company released its Q1 2026 earnings report.

In an official SEC filing, Upwork announced:

“On May 7, 2026, the Company announced a restructuring plan, intended to build a more efficient operating model and position the Company for profitable growth as the nature of work evolves. The Restructuring Plan includes an expected reduction of the Company’s total workforce by approximately 24%. The Company expects execution of the Restructuring Plan to be substantially complete in the fourth quarter of 2026.”

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That’s one of the biggest tech layoffs of 2026 in terms of percentage.

They are calling this move a “restructuring plan,” which is corporate language for reorganizing the company to reduce costs and change how it operates.

Upwork expects the restructuring process to be complete by the end of the year.

Even though cutting employees saves money in the long run, companies still have to spend money up front. In this case, they expect to spend between $16 million and $23 million on restructuring costs.

Most of that money will go toward severance packages and termination-related costs.

But the important thing here is the wording about “profitable growth as the nature of work evolves.” 

That’s corporate speak suggesting the company thinks the market is changing fast, because of AI and automation. Instead of continuing with the same size workforce, leadership believes they can operate with fewer employees while still growing revenue.

Overall, this filing sends a pretty clear message:

• The company is under pressure to improve profitability
• It believes it currently has more staff than it needs
• Leadership is trying to reduce costs aggressively

Upwork is not a company firing on all cylinders. This is a company with stalling growth, making a dramatic internal cut to squeeze out profitability.

What Upwork CEO Is Saying

The official memo from CEO Hayden Brown, shared with employees on May 7, is framed around strategy rather than struggle. 

She starts by saying the decision was difficult and that she personally takes responsibility for it.

Then she explained the reasoning behind the layoffs.

Brown says the business itself is still doing well, but the leadership believes growth is slowing because the labor market has become unpredictable and volatile. 

She wrote:

“However, external dynamics in Q1 indicate growth may be slower in the near term.

We chose to take this step now for two reasons: (1) we know we move faster with smaller teams. Our 2024 layoff, followed by excellent 2025 execution give us confidence that this works. (2) To meet our profitability goals in a challenging environment.”

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Basically, there are two main reasons:

1. Smaller teams move faster
2. The company wants to improve profitability

That first point is very revealing. She directly says leadership believes leaner teams are more effective and references Upwork’s 2024 layoffs as evidence that the company performed well afterward. 

In other words, management now sees workforce reductions as something that can actually improve execution rather than hurt it.

The second reason is about profits. Public companies are constantly under pressure from investors to increase profitability, especially during uncertain economic conditions. Layoffs are one of the fastest ways to reduce costs and improve margins.

The memo becomes even more interesting when it starts talking about AI.

Brown says Upwork rethought the company, examined how every function could operate using both people and technology. That’s just some corporate language for automation and AI-driven efficiency.

She specifically mentions:

• Consolidating redundant work
• Reducing workflow handoffs
• Flattening management structures
• Using smaller engineering and product teams

In short, she believes modern AI tools allow even smaller teams to produce more work than before. 

That’s a huge statement because it shows how executives increasingly see AI not just as a productivity tool, but as a reason to reduce headcount.

This is one of the clearest examples yet of a public tech company openly admitting AI can reduce headcount.

Another key theme is organizational simplification.

This reflects a broader trend across tech companies right now. Many executives believe large corporate hierarchies slow down innovation and execution. By cutting management layers, companies hope to move faster. Microsoft’s recent voluntary buyouts are also following this trend.

Brown also mentions an “All Hands” meeting the next day. 

In tech companies, that usually means a company-wide meeting where leadership addresses concerns and tries to calm employee fears.

Bottom Line

Here is where this story gets genuinely strange. Upwork highlighted in its earnings release that gross services volume from AI-related work increased more than 40% year over year.

So Upwork is: growing its AI products, cutting its human staff, and running a marketplace that is itself supposed to protect human workers' ability to earn a living. 

The platform that markets itself on the value of human talent is replacing its own people with the same technology it is selling to clients.

But the pattern is consistent across the entire tech industry. Companies posting flat-to-modest revenue are using AI as the framing for headcount reductions.