How Gild aims to turn tech hiring on its head

July 16, 2012, 12:59 PM UTC

FORTUNE — When a San Francisco-based job recruitment software firm called Gild was looking for a programmer this summer, it had to compete with tech companies in Silicon Valley also chasing local developers with stellar pedigrees. So Gild CEO Sheeroy Desai and his team decided they were going to try to hire someone less known and more affordable. They used the software they’re trying to market, which ranks developers based on the quality of their free, open-source code.

Gild executives searched for a developer versed in a coding language called Ruby on Rails. Based on Gild’s ranking system, Jade Dominguez was one of the best in the Los Angeles area. Dominguez has no formal post-secondary education and taught himself to code using free tools available online. Now he is a web application developer for Gild.

Dominguez exemplifies a problem that Desai wants to solve — great coders without killer degrees get buried in the resume pile. “The system today is totally biased,” says Desai. “Discrimination is rampant in this industry. We are trying to bring meritocracy back into recruiting.” Gild, he says, has found a way to pinpoint talent without getting hung up on traditional credentials.

MORE: Second careers that make the world a better place

Desai, at first, seems like an unlikely leader for this crusade, given that he has a degree in electrical engineering from MIT, which he admits gave him a big boost early in his career. But he’s seen talented coders passed over for jobs for questionable reasons, he says, and he wants to change that.

Ultimately, Desai wants to upend the way recruiters and jobseekers connect online. “LinkedIn is doing great work collecting resumes, but what hasn’t been solved is the problem of who is good and how good they are.”

Gild is taking some steps to address this problem, at least for developers. The company officially launched a software product on Monday that scans code that developers submit to free, open-source platforms such as Google Code or SourceForge. Then, it ranks developers based on the quality of the code they produce. The idea is to sell the ranking system to companies looking for developers.

Granted, it can be difficult to tell what makes some code better than others. One key indicator is simplicity, Desai says. People who solve a problem using relatively few, elegant lines of code are generally considered good. Gild also looks at how well-documented the code is — how many other people use it, and whether it’s been accepted to a high-profile open-source project, such as Linux.

Gild is “just getting out of the Beta phase,” according to Desai, which means it’s got paying customers, some of them well-known, including Box, Salesforce (CRM), and Red Hat (RHT).

MORE: Seamless knows what you want for lunch

But before it revolutionizes hiring in tech, Gild must handle a few kinks in its system. For one, its software only ranks coders who submit to open source platforms, and plenty of talented people still don’t do that. And while Gild’s software can tell you something about the quality of code people produce, it can’t tell you if an employee is likable or dependable — that’s information that still comes through in an old-fashioned interview.

For now, Desai says, many companies use Gild alongside the systems he’s trying to disrupt: human resources personnel looking for developers will search LinkedIn (LNKD), then check people’s coding abilities against Gild’s ranking system.

There’s another potential hurdle, all too familiar within the digital world, and that’s privacy. Coders that Gild ranks might not know they’re part of the database until an interested company calls them. Gild’s system is opt-out, not opt-in, Desai says, although many of Gild’s more than a million ranked coders may not know there’s a system to opt out of.

A Gild-driven hiring meritocracy would be useful for tech companies, especially if the software could really unearth coveted talent in unlikely places. But Desai isn’t sure how many people have been hired through Gild, because the software doesn’t track how companies follow up with developers. Going forward, the company will have to iron out glitches in its business model as it keeps trolling the Internet for the masterminds behind clean code.