The Odds Microsoft Buys Upwork Just Went, Um, Up

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Dec 11, 2018

Microsoft doesn’t want to lose its hold on enterprise computing. It ousted IBM from that mountaintop many moons ago, and it’ll be damned if Google or Salesforce or whoever is going to return the favor. That’s a big reason it dropped $26.2 billion for LinkedIn in 2016 and $7.5 billion for Github this year.

“I think it impacts the recruiting business in a major way,” I said following the Github deal. “The ripple effect should have a number of vendors who rely on LinkedIn and GitHub data on the defensive. Stay tuned for more opinion pieces on this topic. The fact Microsoft owns two of the top recruiting tools for jobs, and more specifically tech jobs, matters a lot.”

So, how does Microsoft follow up owning the No. 1 business networking site and the No. 1 technical online community in the world? How about owning the No. 1 freelancing site on the planet? Book it, I believe it’s happening. Here’s why.

Upwork & Microsoft Partner on Solution to Enable Enterprises to Build Freelance Teams at Scale

Announced last week, Microsoft has chosen Upwork to be its launch partner for the Microsoft 365 freelance toolkit. The toolkit is a workforce collaboration tool that helps enterprises work with freelancers. It will be powered by Microsoft 365 and Upwork Enterprise.

“Technology and changing worker preferences are driving demand for new skills and sources of talent. Enterprises are increasingly struggling to attract highly specialized talent at a time when speed and agility are more important than ever before,” said Stephane Kasriel, CEO at Upwork, in a release. “By partnering with Microsoft, we’re empowering enterprises to build effective workforce models that enable them to be more agile, innovate faster, and create opportunities for growth. Enterprises can embrace workforce change by engaging the right talent where they are, hiring them on-demand in a few hours instead of a few months and helping their teams get more work done.”

In addition to teaming up with Upwork on the Microsoft 365 freelance toolkit, Microsoft is using the Upwork Enterprise solution to launch a pilot program for specific teams at Microsoft in order to give employees access to a large pool of freelancers.

“With 56 million people freelancing in the U.S. and unemployment at historic lows, enterprise companies are seeking new ways to access experts and flexible talent that help us accelerate projects,” said Peter Loforte, general manager for Microsoft Office. “At Microsoft, we have embraced the freelance model within specific teams to increase efficiencies and access the expertise of freelancers from around the world. Together with Upwork, using the Microsoft 365 freelance toolkit, we’re also empowering other enterprises with a robust solution that leverages their existing Microsoft tools to extend workforce capabilities and simplify work with freelance teams.”

In 2018, Microsoft completed over 2,000 projects on Upwork, ranging from writing, research, video editing, translation, design, and data science, with adoption spanning across 25 internal teams and hundreds of employees.

What’s Next

Talk about leasing with an option to buy.

Freelancing would be a major piece  for Microsoft to add to its workforce dominance puzzle. LinkedIn was a great foundation with which to start, and Github provides a pipeline to tech talent for the foreseeable future. Adding Upwork to the family would solidify Microsoft’s place in the fast-growing freelance economy.

The workforce share of freelance work rose from 10.1 percent in 2005 to 15.8 percent in 2015. By 2020, half of the U.S. workers will be freelancers. The other side of that coin means LinkedIn-as-we-know-it will need to evolve or become irrelevant. Acquiring Upwork, in addition to being a sound investment on the future, is also a way for Microsoft to buy insurance on the past (buying LinkedIn). It’s also insurance that Upwork doesn’t land in the hands of Google, Slack, Salesforce, or a few others.

As of this article, Wall Street hasn’t taken much note to the move, as Upwork stock is down in what’s an already-volatile market. The current stock price puts a valuation on Upwork in the $1.5 billion range, which means it’s well within Microsoft’s purchasing power. Additionally, if the market continues to freak out like it has the past few months, Upwork could end up being an absolute bargain.

Of course, as I mentioned earlier, the ultimate goal for Microsoft is protecting its Office cash cow, which has served as a printing press for money since the ’90s. Becoming the go-to, one-stop-shop for full-time professionals, top tech talent and freelance workers would go a long way to accomplishing that goal.

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