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They look for keywords and phrases.
If you don't have enough to reach a certain threshold, you insta-fail, and only get looked at if somehow all the people that pass it fail their first in person interviews.
This is why Indeed considers it a violation of their TOS to use an AI agent to autofill an application and/or write a custom resume and cover letter for each job:
Basically all you have to do is rephrase the job description into an application / resume format.
Nobody at HR nor most headhunters actually know anything about the words they are using, they just look for a match of buzzwords, relevant degrees, schools/unis that are highly ranked by some.other metric.
Everyone knows this whole process is bullshit, but to some extent pretends it isn't so, which is why, as you mention, its all referrals, ie, nepotism.
It is not functionally possible to assess merit and aptitude with the current system. Merit means nothing, because anyone with a modicum of charisma can bullshit their way through a fluffed up, exagerated resume and interview for most positions.
What it can accurately assess is desperation.
Oh right, forgot to add in there the whole 'ghost jobs' behavior.
Here's what you do:
List a bunch of job openings to make it look like your company is doing well, exoanding, growing.
In reality, you're not hiring, or you are actually just promoting someone internally, but you're legally required to pretend the position was open to anyone. Oops! All those resumes went to the trash, we waited 3 months, clearly our internal employee just outshined the entire job market.
This is why there has been a huge disconnect between the amount of job openings and actual hires since COVID, if not earlier.
Also makes the general macroeconomic indicators look better than they actually are, if you don't bother to actually look at all the data... which most people who really should be, aren't.