Skills-based hiring trends grow stronger in tech sector

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

The report, "The State of Skills-Based Hiring In Tech 2024," highlights the growing challenges faced by both companies and candidates in the tech industry. Nearly half (48%) of tech firms reported finding it more difficult to recruit talent this year compared to 2023, and 56% indicated that skills shortages are a primary challenge.

In response to these difficulties, many tech sector employers are turning to skills-based hiring as a solution. Notably, 93% of tech employers believe this approach can address the industry's diversity issues. The tech sector's readiness for skills-based hiring is attributed to a significant number of remote workers and the high technical skill requirements for roles.

TestGorilla's report reveals several benefits that tech industry employers experience when using skills-based hiring, including:

• 97% reduction in mis-hires (an 8% increase from the industry-wide average)
• 84% reduction in cost-to-hire (an 8% increase from the industry-wide average)
• 86% reduction in time-to-hire (a 6% increase from the industry-wide average)
• 91% improvement in retention (same as the industry-wide average)
• 93% improvement in diversity (a 3% increase from the industry-wide average)

According to Jonas Atil, Director of Recruitment at NexusHR, "Testing is definitely important, especially now in this age where the cognitive requirements for most tasks are increasing. That alone warrants an assessment tool measuring cognitive capacity. And then, of course, we need to test for specific skills that can’t be demonstrated in a resume, like coding."

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

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

TestGorilla's CEO and co-founder, Wouter Durville, commented on the evolving employment market: "We are three years into producing The State of Skills-Based Hiring reports and the trend is undeniably clear – skills-based hiring is becoming the dominant and preferred recruitment method, not just for businesses, but for employees seeking new jobs. Degree requirements are not going away yet, with 59% of employers saying it is actually more important for candidates to have degree qualifications. But skills-based hiring methods are complementing and in many cases replacing traditional recruitment, and organisations that don’t give non-degree-holding candidates a chance to demonstrate their skills are in danger of missing out on an untapped pool of talent."