Are you still relying on degrees and job titles to assess and hire candidates? The job market has evolved, and so have the methods for finding top talent. Traditional hiring practices are no longer enough.

A 2023 LinkedIn report shows that 69% of employers in India now prioritise skills over conventional qualifications. This shift is reshaping recruitment strategies across industries, emphasising real-world abilities over credentials. Skill-based hiring, as this trend is called, is the future of recruitment, particularly in the face of rapid technological change and evolving workplace demands.

Another study shows that 65% of hiring managers assess candidates based on their skills, even when they lack specific educational qualifications or job titles.

In this article, we’ll explore what skill-based hiring is, why it’s gaining momentum in India, the benefits it offers, and how Evaluate AI helps organisations adopt this forward-thinking approach.

What is Skill-Based Hiring?

Skill-based hiring focuses on assessing candidates by their skills and competencies rather than their academic or professional backgrounds. For instance, if you’re hiring a marketing executive, you’ll focus on the ideas and strategies a candidate presents rather than whether they hold a marketing degree.

This recruitment strategy evaluates both hard skills, like coding and data analysis, and soft skills, such as communication and problem-solving. With a large number of graduates entering the workforce each year in India, but many lacking practical skills, the skill-based hiring method is especially relevant.

A NASSCOM report found that 50% of Indian graduates are unemployable due to a skill gap between academic curricula and industry needs. This mismatch drives companies to prioritise practical skills over degrees.

Why Skill-Based Hiring is Gaining Momentum in India?

Reason #1: The Evolution of Work

The advent of automation, artificial intelligence (AI), and digitisation has transformed jobs into work roles, across industry sectors. As a result, traditional degrees no longer assure that a candidate is equipped with the set of skills required to successfully operate in a high-speed industry environment such as tech, finance, or healthcare. Employers have begun seeking candidates in work roles – who are able to adapt to the new technology and workflow quickly.

Reason #2: The Growth of the Gig Economy

The gig economy in India is on an upward trajectory, and ASSOCHAM has calculated that by 2025 India’s gig-worker population will represent 56% of the global workforce. In most cases, they have trodden different paths and thus evaluation of these freelancers or contract workers on their skills rather than having taken the normal steps is essential.

Reason #3: Talent Mobility

Younger segments of employees, particularly millennials and the Gen Z cohort, are generally less ‘fixed’ on pathways to roles in carried interest to building a portfolio of skills through learning gained by internships, apprenticeships and various online courses; In fact, a study conducted by Coursera in 2022 revealed that 82% of the learners in India assessing online learning were there, via free platforms or paid to up-skill and enhance their identification to work. The trend of developing skills out of evolving educational pathways therefore validates skill challenged evaluation methods.

What is the Difference Between Skill-Based Hiring and Traditional Hiring Methods?

Traditional hiring methods typically involve screening candidates based on their education and work experience. Recruiters assess whether a candidate fits the role well based on their resume and cover letter. This method is outdated and prone to biases based on work history or personal factors.

Skill-based hiring, on the other hand, prioritises a candidate’s skills and competencies. It involves skill tests and specific performance-based assessments to identify qualified candidates. This method helps you recruit the right talent and lowers unconscious bias by focusing on the candidate’s skills instead of their background.

Factor Skill-Based Hiring Traditional Hiring
Focus
Emphasises skills, competencies, and practical abilities.
Prioritises formal education, degrees, and work experience.
Candidate Evaluation
Uses skills assessments, real-world problem-solving tasks, and project-based evaluations.
Evaluates candidates based on academic qualifications and job history.
Job Requirements
Describes specific skills and competencies needed for the role.
Lists qualifications like degrees, certifications, and years of experience.
Candidate Pool
Includes a broader range of candidates, including those without formal degrees but with relevant skills.
Often excludes candidates without traditional qualifications, even if they possess the necessary skills.
Diversity and Inclusion
Increases diversity by considering non-traditional candidates and reducing educational biases.
May perpetuate biases, particularly against candidates from non-prestigious schools.
Flexibility in Hiring
Focuses on adaptability and a candidate’s ability to learn new skills.
Emphasises fixed qualifications and past roles, making the process less flexible.
Time and Cost
May involve more upfront time for skills assessments but reduces long-term costs due to better job fit and lower turnover.
Faster to implement, but can result in higher long-term costs due to poor job fit and higher turnover.
Retention Rates
Higher retention, as candidates are more likely to be engaged in roles that match their skill set.
Lower retention, as candidates may leave if their qualifications are not fully aligned with job expectations.
Adaptability to Industry Changes
Easily adaptable, as skills can be updated to meet evolving industry demands.
Less adaptable, as the focus is on existing qualifications that may become outdated.
Outcome
Results in a more competent workforce with the ability to meet practical job demands.
Often results in a workforce with traditional qualifications but may lack the hands-on skills needed for specific roles.

Why Skill-Based Hiring is the Future of Recruitment?

Today, more and more companies are open to considering candidates based on their skills despite not having a relevant college degree or work experience.

LinkedIn has reported a 21% increase in job postings emphasising skills and responsibilities rather than qualifications and requirements. Here’s why recruiters are increasingly turning to skill-based hiring:

skills based hiring is future of recruitment
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#1: Better Quality of Candidates

Research suggests the cost of a poor hire can be 5 to 27 times the candidate’s base salary. Skill-based hiring helps you identify and recruit top talent who can quickly adapt to the team and company, think on their feet, and add valuable skills to their teams.

#2: Extensive Talent Pool

Skill-based hiring allows recruiters to go beyond education and work details and access a broader pool of candidates who can better fit the job. This doesn’t mean you need to eliminate these requirements. 70% of companies still have educational requirements. However, they’re also open to interviewing candidates who may not have the required academic background.

#3: Quicker Time to Hire

Another reason skill-based hiring is gaining popularity is that it reduces the time taken from screening a candidate to sharing the final job offer. 81% of recruiters reported a reduction in time to hire with skill-based hiring, and 78% said skill-based hiring has reduced their hiring costs.

#4: Better Retention Rates

According to a LinkedIn report, companies that follow a skills-based approach for internal mobility retain their employees for an average of 5.4 years compared to the standard average retention span of 2.9 years. This is because a skills-based approach fosters a continuous learning environment, encouraging employees to grow.

#5: Closing the Skills Gap

Skill-based hiring directly addresses the skills gap, which has been a long-standing issue in India. The traditional focus on degrees often overlooks talented individuals who may not have the highest qualifications but possess the technical skills needed for specific roles.

With over 50% of graduates reportedly unemployable due to the mismatch between academia and industry, skill-based hiring helps bridge the gap by ensuring that the right talent gets matched with the right roles.

What are the Biggest Hiring Challenges Addressed by Skills-based Hiring?

Biggest Hiring Challenges that are addressed by skill-based hiring are as follows:

Challenge#1: Combatting Degree Inflation

In the past few years, job postings have increasingly called for advanced degrees for positions for which they were not essential. The term degree inflation is used to describe the growing and warranted criticism against using degree attainment in hiring as a mechanism to exclude qualified candidates. Skill-based hiring helps mitigate degree inflation by prioritising knowledge of applicable skills for the job rather than formally recognised educational criteria.

Challenge #2: Addressing the problem of underemployment

Although India has a robust workforce, many of the individuals in the workforce are considered underemployed, meaning they work in jobs that utilise skills beneath their level of educational attainment.

A skill-based focus assures job placement for adequately matched individuals upon hiring maximising the use of their knowledge and expertise is used for companies combating employee underemployment taking advantage of skilled individuals across an industry could make the most efficient use of available talent. 

How Organisations Can Implement Skill-Based Hiring?

Transitioning to a skill-based hiring model involves rethinking traditional recruitment processes and adopting new strategies for evaluating candidates. Here’s how companies can successfully implement this approach:

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1. Define the Skills Required for the Role

In a skill-based hiring process, it’s important to first identify the skills you’re looking for in a candidate. This will help you accelerate the screening process and reduce the time to hire. 

Discuss the requirements with the team manager to identify the analytical and soft skills required for the role and whether any ‘acquired’ skills can be learned on the job. This includes both technical skills (e.g., coding, data analysis) and soft skills (e.g., communication, problem-solving). For example, instead of requiring “a degree in computer science,” a job description could specify “proficiency in Python, Java, and SQL.”

2. Use Talent Assessments to Screen Candidates

For an efficient skill-based hiring process, replace resume-focused screenings with pre-employment assessments. This will help you identify suitable candidates early in the hiring process, reducing manual work and avoiding the risk of bad hires.

You can use an online tool to automate these assessments and get accurate, unbiased results. Platforms like HackerRank and Evaluate Hum.Ai.n Interviews provide coding challenges for software developers, while Pymetrics uses neuroscience-based games to assess soft skills such as decision-making and emotional intelligence.

3. Utilise data analytics

Currently, many recruitment tools and ATS use AI and data analytics to propose possible skill-based matches between candidates and job requirements. Data can be used to analyse candidates’ portfolios, their earlier projects, and skill-related certificates, allowing employers to make wiser selections. 

Hum.Ai.n Interviews by Evaluate is one such tool that not only provides unbiased, pre-assessed candidates, but also provides data analytics to hire the best.

According to Deloitte’s Global Human Capital Trends 2022 report, 45% of organisations are already utilising AI-based tools to assist with skill-based hiring selection. 

4. Prioritise 'Culture Add' Over 'Culture Fit'

While employees must share a similar culture to avoid conflict, this shouldn’t be a major deciding factor when hiring. Instead of focusing on whether an employee will be a good culture fit, focus on what they can add to the existing culture.

This will help you create a more dynamic, diverse, and creative workforce that not only shares the company’s values but also adds its own perspectives to it.

5. Conduct Skill-Focused Interviews

Design effective interview questions to gauge a candidate’s skill set. Ask situational questions to assess a candidate’s problem-solving skills, work ethic, values, and behaviour.

Even industry giants like Apple use clever interview questions to assess a candidate’s soft skills.

6. Encourage Continuous Learning

Skill-based hiring relates closely to continuous learning and upskilling. Organisations should enable employees the opportunity to grow and learn new skills through training programs, certifications, and courses sponsored by the organisation. This is beneficial for both the employee, to stay competitive on the job, as well as for the organisation to help stay nimble in a dynamic labour market. 

The Future Outlook of Skill-Based Hiring in India

The trajectory of the recruitment industry in India is heading towards skill-based hiring. In an evolving job environment, organisations will need to shift from filtering candidates based on traditional means of qualifications to increasingly align sourcing strategies toward competencies that drive performance and productivity. Companies will be encouraged to prioritise competencies primarily in consideration of the rapidly changing economy and an ever-evolving labour force changes px-0 along with a new set of competencies that will add to the evolving job market. 

 

A report from McKinsey states that in the next 10 years, 375 million workers globally will switch occupational categories due to automation. For India, we should focus on reskiling workers, as well as hiring competence and competencies that can withstand the threat of automation or technology, such as digital literacy, data science, machine learning and software development knowledge and experience.

How Evaluate AI Helps with Skill-Based Hiring?

Evaluate AI is a cutting-edge recruitment platform built for skill-first hiring. We offer a suite of unbiased, data-driven solutions that help companies streamline their recruitment processes. From identifying and screening candidates to conducting AI-powered interviews, our platform enables faster, more accurate hiring decisions.

Our patent-pending Hum.Ai.n© system emulates human traits like progressive complexity, nudges, and video questions, allowing companies to evaluate candidates with unprecedented accuracy. By integrating skill assessments into your hiring strategy, Evaluate AI ensures that you hire candidates based on their abilities, not just their academic backgrounds.

Transform your recruitment process with Evaluate AI and embrace the future of skill-based hiring. 

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FAQs

What is skill based approach in HR?

A skill-based approach in HR focuses on evaluating and hiring candidates based on their competencies and abilities, rather than just qualifications or experience, to meet job-specific needs.

The skills-based method focuses on assessing and employing individuals based on their specific skills and competencies, rather than traditional qualifications like degrees or years of experience.

A skills-based interview focuses on evaluating a candidate’s specific abilities relevant to the job. It involves asking questions that assess practical experience, problem-solving, and core competencies required for the role.