Karat is making a decisive move in the future of technical hiring. With the launch of Karat NextGen, the company is introducing the first human-led, AI-enabled talent evaluation system designed to measure engineering ability in an era where humans and AI collaborate every day. It arrives at a moment when engineering productivity is rising faster than ever, and organizations are scrambling to identify talent that can harness this shift.

Karat’s new 2025–2026 AI Workforce Transformation Report outlines a clear trend: the ROI of a strong engineer is expected to triple in the next three years. Nearly 70 percent of engineering leaders plan to scale their AI capabilities, but most companies still evaluate engineers using outdated, pre-LLM criteria. The gap between what companies need and how they hire is widening quickly.

“Most companies are still hiring based on a pre-LLM rubric,” said Jeffrey Spector, co-founder and president at Karat. He argues that the nature of engineering has changed, and technical interviews must evolve with it. Karat NextGen aims to deliver a hiring signal that reflects modern work—where humans and AI operate in the same loop.

A New Benchmark for Human + AI Talent

Karat draws from a dataset built over more than 600,000 industry interviews. That consistency has allowed global brands like Atlassian, Duolingo, and PayPal to define engineering quality in a structured and measurable way. With NextGen, Karat is turning that historical foundation into a future-ready interview format.

The system is fully managed and aligned with the speed of AI advancement. It adapts as tools, models, and workflows evolve, helping leaders build engineering organizations capable of facing rapid transformation. As AI reshapes the development landscape, companies need a reliable way to evaluate whether candidates can think critically, collaborate with AI, and make sound engineering decisions.

Engineering Reality, Not Theoretical Coding

David Lau, VP of Engineering at OpenAI, reinforced the pace of change. AI models have progressed from autocomplete tools to agents capable of writing full libraries and exploring new solutions. As he notes, last month’s edge cases quickly become standard. Organizations that fail to rethink their hiring will fall behind.

This shift demands interviews that reflect reality and cannot be auto-solved by a model. That means giving engineers real-world environments, complex multi-file projects, and AI tools integrated directly into the workflow. More importantly, it requires expert interviewers who know how to differentiate between genuine engineering thinking and what comes from an AI prompt.

Inside the NextGen Interview

Karat NextGen blends live human evaluation with AI capabilities in a single interview flow. Candidates work through complex projects with an integrated AI assistant while collaborating with Karat’s Interview Engineers. The format tests reasoning, trade-offs, debugging, and judgment—factors that AI alone cannot fully reveal.

It also ensures fairness by applying consistent structure across all interviews, reducing bias and preventing inflated performance from AI-generated answers. The goal is not to punish AI use but to measure how well an engineer can wield it.

“AI is transforming engineering, but the real breakthroughs happen when human judgment and AI capabilities work together,” said Sagnik Nandy, CTO at DocuSign. He argues that organizations need reliable ways to identify talent that thrives in this dual-intelligence model. Karat NextGen provides a framework for doing exactly that.

A Turning Point for Engineering Hiring

As software development becomes more AI-centric, hiring becomes far more complex. Companies can no longer rely on traditional coding tests or theoretical questions. The teams that succeed will be those that evaluate engineers the way modern development actually happens: collaboratively, interactively, and with AI as a core tool.

Karat NextGen enters the market not as an incremental update but as a response to a structural shift. Engineering leaders now need to understand who can reason with AI, challenge AI, and use AI responsibly—all while maintaining the depth of skill that defines great engineering.

With NextGen, Karat aims to set a new standard for measurement. The company positions the platform as a crucial solution for CTOs, CIOs, and VPs of Engineering who want to build resilient teams capable of succeeding in the human + AI era. As AI accelerates, the organizations that adapt their hiring the fastest will gain a meaningful competitive advantage.

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