The rapid evolution of the information technology sector necessitates innovative educational methods not only addressing current industry needs but also anticipating future challenges. This study aims to explore the transition from traditional pedagogical approaches to challenge-based learning (CBL) within the context of an undergraduate course, "Ethical, Social and Professional Aspects of IT" (120 participants). It investigates how this methodological shift influences the development strategies of the course and the pedagogical outcomes for students, particularly first-year IT administration and development students engaging in practical group work. Employing a mixed research design, the study gathers data through reflections of the course staff, empirical study with students and analysis of the didactic changes within the course. It evaluates the effectiveness of problem-based learning (PBL) and CBL methodologies in addressing real-world IT ethics, social, and professional challenges with a focus on fostering creativity, problem-solving skills, and interdisciplinary collaboration. Preliminary findings suggest that CBL not only enhances students' engagement and learning outcomes but also bridges the gap between academic knowledge and practical application in the IT sector. The collaboration students provided insights into real-world challenges, improving students’ learning and administrative experiences at the university. Furthermore, the study highlights the advantages of integrating both PBL and CBL to cultivate a more dynamic and responsive educational environment. The shift towards CBL in the "Ethical, Social and Professional Aspects of IT" course at Tallinn University of Technology represents a significant step forward in aligning educational practices with the needs of the contemporary and future IT industry, preparing students for the complexities of the modern workforce, and contributing to a sustainable, innovative, and resilient economy. Further research is needed to fully understand the long-term impacts of this pedagogical shift and to refine the methodologies for broader application.