Skill-based hiring trends are gaining traction in the tech sector

Tech companies are increasingly adopting skills-based recruiting methods, with 88% of organizations in the sector using this approach. That figure is seven percentage points higher than the average of 81% across all sectors, according to a recent report by talent discovery platform TestGorilla.

The State of Skills-Based Hiring In Tech 2024 report highlights the growing challenges facing both companies and candidates in the tech industry. Nearly half (48%) of tech companies said recruiting talent is more difficult this year than in 2023, and 56% cited skills shortages as a top challenge.

In response to these challenges, many tech employers are turning to skill-based hiring as a solution. Interestingly, 93% of tech employers believe this approach can solve the industry’s diversity issues. The tech sector’s willingness to adopt skill-based hiring is attributed to the large number of remote workers and the high technical skill requirements of the positions.

TestGorilla’s report reveals a range of benefits that tech employers are experiencing by adopting skills-based recruiting, including:

• 97% reduction in misplaced hires (8% increase over industry average)
• 84% reduction in labor costs (8% increase compared to the industry average)
• 86% reduction in recruitment time (6% increase over industry average)
• Improved retention by 91% (industry average)
• 93% improvement in diversity (3% increase over industry average)

According to Jonas Atil, NexusHR’s Chief Recruiting Officer, “Testing is definitely important, especially now, when the cognitive demands of most jobs are increasing. That alone justifies an assessment tool that measures cognitive abilities. And then, of course, we need to test specific skills that can’t be demonstrated on a CV, like coding.”

The report also highlights a significant trend among candidates who show a strong preference for skills-based hiring. About 80% of tech workers prefer a skills-based hiring process, which is 12 percentage points higher than the industry average of 68%. Joan Pelayo, a marketing candidate, noted, “If you’re applying for a remote job, chances are you’re competing with hundreds, if not thousands, of other candidates for a single position. It’s very easy to get overlooked. But with talent assessments, I know I have a chance to show that I’m a great fit for the role.”

Preference for skills-based hiring methods is particularly strong among younger candidates, with 92% of 25-34 year-olds favoring this approach. Across all age groups, 68% of employees want organizations to increase their use of skills-based hiring in the future.

TestGorilla CEO and Co-Founder Wouter Durville commented on the evolution of the job market: “We’ve been publishing The State of Skills-Based Hiring for three years now and the trend is clear – skills-based recruitment is becoming the dominant and preferred method of recruitment, not only for companies but also for employees looking for a new job. Degree requirements are here to stay, with 59% of employers saying that it’s more important for candidates to have a degree. However, skills-based recruitment methods are complementing, and in many cases replacing, traditional recruitment, and organisations that don’t give candidates without a degree the chance to demonstrate their skills are at risk of losing out on untapped talent.”