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When considering new hires, 80% of corporate executives will prioritize skills over degrees, with half planning to increase freelance hiring this year to fill in for a gap in AI and other skills, according to a new study from freelancing platform Upwork.The study, released this week, showed unprecedented growth in specialized AI skills, which have surged 220% year-over-year.At the same time, degrees continue to lose relevance when it comes to hiring freelancers, with 74% of execs focused more on proven expertise. Moreover, 78% of CEOs say top freelancers deliver more value than degree-holding employees, emphasizing skills over credentials to stay competitive. And 29% of C-suite executives consider freelancers essential to their operations, with 51% saying their business would be difficult to run without freelancer support.Skills-based hiring has been on the rise for several years, as organizations seek to fill specific tech needs such as big data analytics, programing (such as Rust) and AI prompt engineering. In fact, demand for genAI courses is surging, passing all other tech skills courses and spanning fields from data science to cybersecurity, project management, and marketing.The top 10 highest paid skills in tech can help workers earn up to 47% more and the top skill among them is generative artificial intelligence (genAI), according to employment website Indeed and other sources.Skills such as genAI modeling now earn freelancers up to 22% higher hourly rates than traditional AI and machine learning roles, according to Upwork.Even as freelancers are reshaping workforce strategies, their rise doesnt necessarily threaten full-time roles. It complements them, said Kelly Monahan, managing director of the Upwork Research Institute.In a study released in October, Upwork found that 85% of top-performing companies which it labels work innovators view freelancers as vital, with 91% planning to expand their use over the next year. Only 71% of non top-performing companies see freelancers as critical to success, Monahan said.While cost savings, such as not paying benefits, could sometimes be a factor in hiring freelancers, it is not the primary driver of freelance hiring, according to Monahan.Businesses prioritize freelancers for their agility and specialized expertise, which enable them to scale resources up or down as needed and address skill gaps effectively, she said.According to Upwork, other reasons for the increase in freelance hiring include:94% of top-performing companies say hiring freelancers gives them access to specialized skills89% say freelancers make their business more innovative84% say hiring a freelancer is faster than a hiring full-time employeeIn addition to hard skills, soft, human-centric roles such as personal coaching have emerged among the fastest-growing skills on Upworks platform, with demand increasing by 74% year-over-year. This underscores the growing importance of guidance and adaptability as businesses invest in reskilling their workforces to navigate technological change, Monahan said. Freelancers are enabling companies to innovate rapidly and adapt to changing market demands.Upwork is not alone in its findings. According to research firm Gartner, organizations are struggling to find skilled talent, and universities once vital for workforce preparation are lagging in updating curricula to match modern demands. As technology and work methods advance, graduates are left with outdated skills, making specific competencies more important than degrees in proving a candidates value.According to Gartner, 74% of HR leaders believe organizations are shifting to skills-based talent management, but only 41% have implemented it, while 50% are still considering it.Approximately half of HR leaders say that a skills-based approach to talent management has the potential to solve many of the challenges their organizations face, though only one-third are actually investing in a skills-based approach to talent management, Gartner said in its report.HR leaders, Gartner said, should prepare for a skills-focused future by:Assessing: Review role requirements to reduce or remove degree mandates.Fortifying: Ready the organization to onboard and support non-degreed talent.Attracting: Target skilled non-degreed talent and adjust EVP messaging to appeal to them.Evolving: Plan for talent management changes to adopt a skills-based approach.New methods of assessing skillsCompanies are adopting more advanced approaches to assessing potential and current employee skills, blending AI tools with hands-on evaluations, according to Monahan.AI-powered platforms are being used to match candidates with roles based on their skills, certifications, and experience. Our platform has done this for years, and our new UMA (Upworks Mindful AI) enhances this process, she said.Gartner, however, warned that rapid skills evolutions can threaten quality of hire, as recruiters struggle to ensure their assessment processes are keeping pace with changing skills. Meanwhile, skills shortages place more weight on new hires being the right hires, as finding replacement talent becomes increasingly challenging. Robust appraisal of candidate skills is therefore imperative, but too many assessments can lead to candidate fatigue.In Upworks In-Demand Skills 2025 report, the skills that are growing in importance include:AI Development: GenAI modeling and AI data annotation are among the fastest-growing skills, reflecting the need for technical expertise in building and managing AI solutions. >Data Science & Analytics: >Skills such as data visualization and data extraction remain essential for making sense of complex information.>Project Management: >Both in supply chain logistics and business operations, project managers are critical for keeping teams aligned and projects on track.>Professional Development: >Skills such as personal coaching and training and development are increasingly sought as companies prioritize workforce reskilling.The shift toward skills-based hiring is further driven by a readiness gap in todays workforce. Upworks researchfound that only25% of employees feel prepared to work effectively alongside AI, and even fewer (19%) can proactively leverage AI to solve problems.As companies navigate these challenges, theyre focusing on hiring based onpractical, demonstrated capabilities, ensuring their workforce is agile and equipped to meet the demands of a rapidly evolving business landscape, Monahan said.According to Upwork, 47% of Gen Z professionalsalready engage in freelance or portfolio work, reflecting their preference for autonomy and skills diversification over traditional career paths.This aligns with modern businesses needs for agile talent who can deliver measurable results, driving the shift toward skills-based hiring, Monahan said. If you are just looking to fill job roles, you will miss out on the rising portfolio career talent.