I've never seen a take home coding challenge that had even the possibility of being used as production code. For me it's always been a standardized, self-contained example problem. Maybe there're scummy companies that try to push job applicants' work to production, but I'd be shocked if that was anywhere close to the modal case.
So it's more like "What I need from you, Joe Electrician, is for you to go wire up this demo kitchen frame that I've set up. Once you're done I will inspect your work and let you know if I'm interested in hiring you to wire up the actual houses I'm building.".
I've definitely seen some prompts that looked suspiciously production-ready.
It's usually not "build out our new feature", because spinup time is a thing, but some companies do seem to throw around "build our new one-off microservice". Stuff like "given this incoming data, set up intake, a storage layer, and a backend layer that applies formula X". If the data and the formula look business-relevant, it's at least enough to raise an eyebrow.
That said, I'm not sure how much I care, provided the interview is sincere and not some kind of bizarre scam to farm out work. My main concern is much more with scale. I totally see the merit of replacing 5 hours of whiteboard interviews with 5 hours of "build a toy project at home". I don't so much appreciate "take a week of your life and build a substantial project so we don't have to do any legwork".
I should maybe have gone into more detail on that example. If BigCompany or even AcceleratorCompany asks for product-relevant work, I'm not going to assume they're having random people off the street write production code.
What I've seen is something like "this is a startup in market X, whose product doesn't do Y but could, and they're asking candidates to write code that does Y, and sign over all rights to everything provided during the interview process".
Optimistically, it means that if whoever they hire will be told "hey, first assignment is Y, you've already made progress!" Pessimistically, it goes in the same category as "Whartonite seeks codemonkey" and "sign this NDA to interview" - it's a matter of ego and ambition exceeding skill.
> We've designed this project to take about 2 hours to complete.
Then you've got it right.
It's good to see people admit whiteboard interviews are a crummy system, I think you can learn way more from X hours of "do a task on a real computer with the internet" than you can from the same X hours of "do algorithms work on a whiteboard".
The objection, for me at least, is to "do 10*X hours of work on a real computer". It's bizarrely common to massively scale up the time investment when moving to this sort of task. And the answer is so easy - just don't do that!
So it's more like "What I need from you, Joe Electrician, is for you to go wire up this demo kitchen frame that I've set up. Once you're done I will inspect your work and let you know if I'm interested in hiring you to wire up the actual houses I'm building.".