Skills-first hiring gains momentum in India Inc, but has hurdles

According to Test Gorilla’s report titled 'The State of Skills Based Hiring 2023', 86 percent of employees say they are more likely to secure their dream job when the hiring process includes skills-based hiring.

Priya Gupta* had never heard of a job role called Digital Marketing Executive, let alone thinking she’d be pursuing it as a career while studying civil engineering four years ago. Her bent towards social media and content writing – self-taught outside her formal education – became her ticket to a tech career.

It wasn't luck though. When campus placement didn't deliver results, she pursued crash courses and eventually landed an internship at a marketing agency. This acted as a career launchpad. However, Gupta thinks it's not a one-sided story.

“My four-year formal degree didn't define my potential. Companies valuing skills opened doors I never thought possible,” she told Moneycontrol.

This shift allows individuals like Gupta to pivot from traditional academic trajectories, fostering a diverse workforce based on competence. In a nutshell, the skills-first approach enables professionals to explore unconventional avenues and emphasises capabilities over pedigree.

Upskilling platforms in India such as upGrad, Coursera, and Great Learning among others have observed that companies are adopting a “skills-first” approach as the hunt for talent gets intense. For instance, IBM India now adopts a ‘skill-first’ approach, where college degrees don’t matter. IBM implemented the ‘skill-first’ approach in the US in 2012 when it removed the four-year college degree requirement from about 50 percent of its jobs. Ten years later, 20 percent of the present IBM US workforce in hardware, software and consulting does not have a college degree.

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Other major companies including Tech Mahindra, Thyssenkrupp Industrial Solutions, Godrej & Boyce (G&B) and Merck are open to different kinds of approaches, where both skill and degree hold importance.

While Thyssenkrupp Industrial Solutions typically considers a graduate engineering degree as the primary qualification for its various needs, there are exceptions. Sonal Singh, EVP & Head of HR and Admin at Thyssenkrupp Industrial Solutions India, mentioned that the company is open to hiring candidates who demonstrate promise even without this fundamental qualification.

Skills-first

A skills-first hiring approach prioritises a candidate's practical abilities over traditional qualifications. In India, this trend is rapidly growing as employers recognise the value of diverse skill sets. It is relevant today as it democratises opportunities, letting talent shine beyond academic labels. Advantages include a more inclusive job market and tapping into hidden talent.

However, challenges may arise in assessing skills accurately. Nevertheless, the future outlook suggests continued growth, fostering innovation and adaptability in a workforce where skills, not just degrees, define success, reflecting a dynamic shift toward meritocracy in the evolving employment landscape.

“As the job market undergoes paradigm shifts, the premium on skills is increasing by the day so much that 70 percent of companies hiring candidates from Great Learning prefer skills over the formal educational background of learners,” Hari Krishnan Nair, Co-Founder of edtech platform Great Learning told Moneycontrol.

Freshers who upskilled through the platform found employment primarily in Information technology (IT) and IT-enabled services (ITeS) companies, followed by Analytics & Data, BFSI, Consulting, Ecommerce, Retail, and Healthcare industries.

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At Great Learning, this trend is driven by the growing integration of advanced technologies like generative AI, Machine Learning, cloud computing, and data science across these sectors. As these technologies continue to propel business and alter business operations, the demand for upskilling in technology remains robust.

Similarly, at Hero Vired, companies are increasingly seeking professionals with specific skills to fill key roles in areas such as valuation analysis, financial research, investor relations management, and risk analysis within this domain.

Some edtech have themselves adopted the approach where the degree doesn't matter in hiring.

“At upGrad it's more than just about qualifications on paper; especially for niche roles in domains like content, marketing and design, it's about the ability to innovate, think out of the box, the freshness in one's ideas, and most importantly one's skill set that sets an individual apart,” said Saurabh Deep Singla, CHRO of upGrad.

Makes it easy to secure jobs?

Experts say skills-first hiring dismantles traditional barriers, offering global work opportunities irrespective of educational background or regional certifications. Take a cybersecurity expert, armed with practical knowledge and certifications, who finds doors opening abroad, as security needs transcend geographical confines.

This approach champions merit over formalities, industry leaders say, enabling professionals from diverse backgrounds to contribute on a global scale. Because every foreign job market will have a specific skill-shortage that they are looking to fill.

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According to Test Gorilla’s report titled 'The State of Skills Based Hiring 2023', 86 percent of employees say they are more likely to secure their dream job when the hiring process includes skills-based hiring.

Besides, it eliminates the must-have learning processes these days. According to Raghav Gupta, MD of India and APAC at Coursera, companies are doubling down on building critical skills that can drive business impact and reduce costs as they brace for uncertainty caused by the rapid pace of globalisation, digital transformation and AI advancements.

“This is steering the next evolution of enterprise skilling to skills-first learning -- a shift from previous ‘open’ approaches that encouraged self-directed learning online and suggested ‘guided’ training,” he said.

A skills-first approach centres around “role-based skill development,” which puts the employee in focus. From learning paths, enterprises are creating career paths for employees. Many Coursera for Business customers now prefer to match skills to each role, helping team members do their job successfully. In the long run, this strategy of focussing on a career progression framework shows employees how they can grow by developing skills to advance and contribute to the organisation.

Hurdles to skill-first hiring

In the shift towards skills-first hiring, organisations entrenched in traditional practices grapple with persistent challenges. Edtechs say these firms often struggle to adapt, relying on outdated markers like prestigious degrees. Consequently, they risk overlooking diverse and capable talent outside conventional academic paths.

Between 2017 and 2019, US employers reduced degree requirements for 46 percent of middle-skill positions and 31 percent of high-skill positions, according to a 2022 The Burning Glass Institute report. Further, the study highlights that for the job of software quality-assurance engineer, only 26 percent of Accenture’s postings for the position contained a degree requirement. This was 29 percent at IBM. However, Oracle had 100 percent, followed by Intel (94 percent), HP (92 percent), and Apple (90 percent).

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Rigidity in hiring criteria may result in a talent shortage, hindering innovation and adaptability. The inertia of sticking solely to traditional qualifications could lead to missed opportunities, as competitors embracing skills-first approaches tap into a broader, more dynamic talent pool.

“There's an internal tug-of-war, that is, the organisations are in constant fear of overlooking top talent with traditional qualifications and the importance of building a workforce equipped with the appropriate skills demanded by today's dynamic workplaces,” said Akshay Munjal, Founder and CEO of Hero Vired.

Besides, technology gaps and barriers to training add complexity, hindering a seamless transition to a skills-first approach.

Munjal explained that while companies implement this approach, they also need to ensure the validity of this as the dependability of skill evaluation is essential. For this, companies must do a combination of tests, in-person interviews, and on-the-job assessments to make sure applicants have the abilities they say they do.

Other prominent HR leaders prioritise formal degrees, especially from well-known colleges.

Sonal Singh, from thyssenkrupp emphasises the strength of the education system, stating that it establishes a robust foundation marked by rigour and depth. The competitive nature of early life in India compels parents to focus on providing quality education to their children. Singh contends that individuals who have undergone this rigorous education are well-prepared to thrive in the high-performance environment of the corporate sector.

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Some experts argue that the 'skill-first' approach is more predominant in emerging industries like technology and will take time to gain traction in other sectors. For example, Shiv Kumar, the HR Head of the science and technology company Merck India, emphasises the necessity for talent to be "qualified" due to the specific requirements in his industry.

According to Kumar, certain areas within the industry mandate the possession of a valid license and degree. He explains that in the past, when talent supply exceeded demand, having a degree served as an elimination criterion to reduce the likelihood of incorrect selections.

(*name changed on request)