ABSTRACT Research on the capacity of universities to produce skilled graduates in developing post-Soviet countries is limited. It was reported that innovative companies in Azerbaijan face challenges in recruiting university graduates with the necessary cognitive and technical abilities. Referring to the perspectives of faculty members, university leaders and representatives of the Ministry of Science and Education, the current study explored the factors that were thought to influence the capacity of universities to develop human resources for the modernizing labour market. The study's results also align with the broader discourse on higher education's role in economic development and offer insights for improving alignment between educational outcomes and labour market needs in developing countries like Azerbaijan. While the management style of educational programmes and the faculty members were recognized as influential aspects of quality provision and assurance for skilled human resource development, university managers expressed a desire for greater support and autonomy from macro-level institutions, such as the Ministry of Science and Education, particularly in curriculum design and fostering more effective university-industry partnerships.