No matter if you are an entrepreneur, a student, a chef or a CEO – the number of hours you have in a day is fixed. Other than changing the time on your clock, there’s nothing you can do about it. However, you can alter the way in which you spend your time. If time is valuable to you then you are most probably interested in getting the most out of your day. And if that is the case, then you surely must have heard of Upwork. If not, then stop everything you are doing and press play on this video below.
TLDW: Upwork is an online platform for connecting businesses and talent across all industries.
So how does their business model work?
Imagine you have a brilliant idea to start a wristwatch business. You’ve taken care of everything from sales to operations to marketing to HR. However, you still missing a logo. If you have some designer friends, you can ask them to draft something for you. However, you are limited only to those friends and potential referrals & if you ask them to do it for free, you face a risk of their disappointment once they see that your final design isn’t theirs.
Probably not a good idea.
Instead, you sign up on Upwork and create a job post titled “Looking for a graphic designer for my sick new wristwatch project.” After clicking submit, you immediately start receiving requests from multiple freelancers that are fighting for you to accept them. After you choose the one freelancer that fits best in terms of your budget and their expertise, you are ready to proceed with the payment.
Upwork charges both sides of the platform – the client & the freelancer. As a client – you will be charged a 2.75% fee from the total amount that you spend on the freelancer. The freelancer fees start from 5% up to 20% of the total amount.
Not bad, eh?
Why even use Upwork?
The system is an efficient and effective tool for both the client and the freelancer. No matter what industry the client or the freelancer come from, they can always utilize this platform effectively due to the powerful matching algorithm.
The clients benefit from:
- Saving time
- Saving money
- Access to a large pool of talent
- Transparent portfolios of freelancers
- Efficient tools for tracking progress
while, the freelancers benefit from
- Additional income
- Access to a large pool of projects/companies
- Transparent portfolios of clients
Given that this tool is very user friendly, the investment & costs that both sides of the network incur are quite insignificant:
- Upwork fees
- Remote communication (usually the case)
- Risk of output not meeting standards (usually mitigated)
The relationships created between clients and freelancers work very well, since the platform provides all support for communication (chat & video) for clarification, to hour tracking for monitoring purposes to payment processing for transaction security. By integrating all of these processes, the Institutional Arrangements are managed efficiently.
Since the fundamental idea of this platform is to create new jobs for freelancers, the Institutional Environment is managed depending on the country’s social, political and legal views. A great example of this is the USA, where Donald Trumps policies are aiming to “bring jobs back to America.” This could definitely have an impact on the platform, since the platform connects clients and freelancers globally.
From a societal perspective, there can be similar trouble caused as with the previous example. Although some may perceive outsourcing as the creation of new jobs, others perceive it as having jobs taken away from them as was pointed out in the satirical show South Park.
Politically, Upwork can also cause trouble regarding the discussed issues. Depending on the country & the specific political parties involved, the opinions will vary. If we were to consider an example of republicans versus democrats, we can assume that republicans would be more against the idea of outsourcing jobs abroad while the democrats would support new job creation and potentially even set a minimum wage for freelancers on Upwork within a specific country.
Upwork. (2017, February 16). About us. Retrieved from Upwork.com: https://www.upwork.com/about/