How AI is inspiring companies to adopt skills-based hiring

• Artificial intelligence is fueling a shift toward skills-based hiring in the workplace.
• Some employers are prioritizing data science, machine learning, and hands-on experience over degrees.
• This article is part of "How AI is Changing Talent", a series exploring how AI is reshaping hiring, development, and retention.

Artificial intelligence is driving a shift in what companies look for in new hires.

While experience has always been a key factor for job seekers, education level matters less and less compared to skill set, enabling companies to "expand their talent pipelines and keep pace with roles that evolve faster than traditional education can," says Lauren Winans, CEO at human resources consulting firm Next Level Benefits.

AI is accelerating the trend, as more organizations seek data science, machine learning, data analytics, and related skills — skills that you essentially learn through doing and repetition, not by going to class.

Indeed, several companies, including Google and IBM, have dropped their degree requirements for some roles in favor of skills-based hiring.

Plus, a quarter of employers said they planned to stop requiring bachelor's degrees this year, instead prioritizing relevant experience, according to a 2025 ResumeTemplates survey of 1,000 US hiring managers.

Skills-based hiring benefits both companies and job-seekers

Skills-based hiring is an "operational necessity," as organizations adopt AI initiatives and require staff to design, build, and manage AI systems and processes, says Anthony Donnarumma, CEO of the recruiting agency 24 Seven.

Plus, relying on skills over degrees reduces the time it takes to fill roles and improves productivity because applicants are "job-ready," he says.

It also helps organizations remain agile and adapt to changing demands, adds Lisa Highfield, principal director of research and advisory services at McLean & Company, an HR research and consulting firm.

A skills-based approach creates new opportunities for employees, too, Highfield says. It can increase workforce diversity and create paths for career advancement, Winans adds.

"Workers are able to compete on the value of their skills — not their resume format or educational history — which can lead to better job matches, higher engagement, and longer-term career growth," Donnarumma says.

How AI accelerates skills-based hiring

At the other end, AI-based screening and hiring tools are offering companies ways to automate skill-based hiring, says Kara Ayers, senior vice president of global talent acquisition for Xplor Technologies, a payment and commerce software company that's already made the shift, prioritizing skills, experience, and potential over college degrees in its new hires — and using AI to do it.

Xplor Technologies began using the AI-powered applicant tracking system SmartRecruiters in 2022 to help them organize and classify the skills needed for each role, Ayers says.

"These tools allow us to analyze resumes and profiles for competencies rather than filtering by degree, and we use AI-driven predictive analytics to match candidates based on skills alignment and potential," she explains.

Since adopting this approach, Ayers says the company has reduced its reliance on recruiting agencies, saving about $3 million. It also fills roles faster — often in under 30 days, compared to more than 60 days in the past — and has improved the quality of new hires, who are now better matched to a role's competencies.

That said, using AI to review applicants based on skills depends on organizations having "a clean, well-structured framework, consistent job architecture, reliable performance data, and HR systems that can integrate skills analytics into hiring workflows," Winans says.

They also need data showing the skills they already have and what they need for the future, Highfield says. And historical workforce data showing how people succeed within the company, Donnarumma adds.

There are some challenges, however

Transitioning to skills-based hiring can be time and resource-intensive, Highfield says. Leadership teams also may need to rethink their traditional hiring practices and beliefs about the value of degrees, Donnarumma says.

AI gives companies tools to build a process that's "more accurate, more inclusive, and far more aligned with the future of work," Donnarumma says.

However, AI bias remains a "real concern," he says. Organizations must incorporate governance into AI-driven hiring, including ensuring team members understand AI and can manage its use effectively and objectively.

Ayers says it's crucial to highlight the benefits of AI while also emphasizing governance.

"It is important to be thoughtful about how AI is used and to thoroughly vet the tools in place," she says. "Both candidates and companies should maintain authenticity and find the right balance in how much they rely on AI."