In recent decades, universities have emerged as strategic actors in human capital development, central to policies promoting employability, professional empowerment, and responsiveness to rapid labor market changes. As workplaces undergo accelerating technological, social, and economic transformations, higher education is expected to transcend traditional knowledge transfer and foster graduates’ hybrid and professional competencies. Despite evidence of higher education’s potential to enhance professional competencies, the role of universities in this regard, particularly within Iran’s higher education system and its associated challenges, remains underexplored systematically. This study aims to elucidate the role of universities in enhancing graduates’ professional competencies and to identify challenges and solutions for competency-based education, employing a qualitative approach with inductive thematic analysis. Data were collected through semi-structured interviews with 40 participants, including faculty members, educational administrators, policymakers, and graduates from skill-oriented universities, selected via purposive sampling, and analyzed using Braun and Clarke’s [15] six-step method. The findings identified five main themes: competency-based curriculum revision, strengthening university-industry collaboration, training in soft and interdisciplinary skills, enhancing teaching and assessment quality, and reforming higher education policy. These findings offer significant theoretical and policy implications for educational policymakers, university administrators, and researchers in human resource development.