Only if you can't determine gender. Otherwise, you'd be "what is she/he doing?"
It's usually clear from context. How often do you look two blocks away and see a group of unrelated individuals doing different things to the point "what are they doing" is unclear? Can't say I've ever run into that in my 48 years.
Oh, I know singular they is used/exists. I'm only pointing out that there is more precise language available most of the time, should it be needed - either she/he or adding details elsewhere in the conversation.
