Employers are struggling to find the right talent and in response are prioritizing skills over degree qualifications, as economic and AI pressures change the hiring landscape.

That’s according to State of Skills-Based Hiring 2025 report from TestGorilla, which surveyed 1,084 individuals involved in hiring decisions across the UK and US.

Nearly two-thirds (63%) of employers said it was more difficult to find talent than it was last year, with over half stating the most difficult part of the process was determining if candidates have the right skills – either soft (53%) or technical (51%).

As a result, more organizations are removing degree requirements from the hiring process. In the 2025 report, 53% had dropped this condition – a year-on-year increase of 77%.

Speaking exclusively to UNLEASH, TestGorilla Co-Founder and CEO, Wouter Durville, says the rise in skills testing and is the “headline this year” as employers react to the “pressures of AI, automation, and global economic uncertainty”.

“More organizations are breaking down outdated barriers and focusing on what truly matters: practical skills and real potential,” he says.

The hiring landscape is changing and so is the process

The decline in degree requirements indicates employers are now focusing on what candidates can actually do, Durville adds.

This includes assessment of practical skills via tests, structured interviews and real-world tasks that “reflect the demands of the job”.

Despite the rise in AI across the workplace, the report found that fewer organizations are hiring for AI skills in 2025 (38%) than the previous year (52%).

TestGorilla’s report also shows a rise in AI use on both sides of hiring – two-thirds (65%) of employers now use AI in hiring, up to 70% in the US and down to 60.5% in the UK.

For those that have implemented AI, the results are clear – 94% said it has improved their hiring process.

Despite this, Durville highlights that AI in hiring is “not proving to be a silver bullet”.

While it does aid in efficiency and administrative tasks, he points out the two-thirds of employers finding it harder to source talent this year.

“This is because hiring isn’t just a numbers game—it’s about truly understanding the whole candidate,” he explains.

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