Direct Contracts is an Upwork feature that lets a freelancer invoice, collect payment from and hold funds in escrow for a client who is not on Upwork, for a fee charged to the freelancer rather than the standard marketplace fee.
Most Upwork work begins with a client who found the freelancer on Upwork. Direct Contracts covers the other case: a client the freelancer brought from elsewhere, who has no Upwork account and does not want one. The freelancer sends a contract from Upwork describing the work, the price and the milestones; the client accepts and pays by card without registering as a marketplace client; Upwork holds the money in escrow and releases it when the client approves each milestone, with the same Fixed-Price Protection and dispute process as a normal contract. Hourly Direct Contracts also exist, invoiced from logged time.
The fee is a flat percentage of each payment, set by Upwork and lower than the freelancer service fee on marketplace work, because Upwork did not find the client. The current rate is in the Help Center and may change.
Two things the feature is not. It is not a way to take an Upwork-sourced client off the platform: that remains circumvention, and a Direct Contract with a client met on Upwork breaks the Terms of Service. And it does not build the profile in the same way: Direct Contracts do not add to the public Job Success Score or earnings total, so they do not help with badges.
How Upwork Insights uses it
This term describes Upwork's own rules or product rather than a figure the index measures; the pages that do carry live figures are the stats and rate pages.