If it's a client you want to work with and this is part of the client's requirements then yes, you should allow this or politely decline the business. The client has the right to ask for anything and you have the right to approve or decline. I ran an offshore software services company in Costa Rica after being a Division Manager at Cognizant and now I advise and work with 50 software companies in 25 countries and this is a common request that is complied with. This isn't to say you shouldn't make the reasonable argument that it is preferred that interviews are conducted just with team leads who will then vet and manage the rest of the team. Even though you recruited, vetted, hired and trained your employees, the client wants to validate that your standards and definitions of capabilities are in line with theirs. That is a reasonable exercise assuming you want the business and you feel that this investment of time and validation will lead to a long, fruitful relationship.

I've never heard of this idea before. It horrifies me, because it says, "We don't trust your judgement."

In your shoes, I would definitely be open to including the client(s) in the drafting of the "Wanted" list of skills, experiences and talents.

But doing your work? That's what they're supposed to be paying you for.

And you're right, it would be so time-consuming nobody would ever get any work done.

I would check if this kind of thing is done in the defense industry; I'm not aware of it but it's the only place I can think it might happen.

"How am I creating value for you, then?" is the question I'd ask the prospective client if they pushed about this.

I completely understand your apprehension.
As an advisor to some virtual teams, this can sometimes stem from distrust of procedures and in other cases, it can be an 'order from upstairs' given in the name of 'quality control'.

Short answer - This cannot become standard protocol. It will cost you time, employee trust (they will feel let down by you) and give clients a sense of power that is unwarranted and may be misused.

That said - you must continue a conversation with the client on your level. Is the project high risk? Have they had a history of bad fits before? They have a right to be heard regardless, given reassurances to specific grievances, and exceptions can be made, but your employees need and expect your protection first.

Happy to continue the conversation!

Are you a commodity business or a value-add business? Because I'll give you a different answer.

When choosing a development shop, I advise my clients to figure out where in the organization technical leadership resides.

If you are a value-add business whose processes and procedures train developers how to deliver high-value, then the technical interview should be you and your technical leadership team, and should go into what you train, who you hire and why, etc.

If you are a simply providing access to developers as a commodity, then you need to expect people will want to do a technical interview of the developers to learn how they will approach their project.

I also advise clients to interview anyone they will work with directly, just to make sure they are good problem solvers and communicate well.

Clients are getting much smarter to the fact that there can be a huge difference in productivity and quality between seemingly identical developers, and a few carefully chosen interview questions can expose that difference. If you don't want to allow interviews, you need to figure out how can you proactively show productivity and quality standards to your prospects and clients.

Good luck!