"Spec work" refers to speculative work. A client will ask one or more designers to each submit one or more designs with no guarantee of getting paid unless their work is selected as the winning bid.

It should not be confused with pro bono work, where the work is unpaid but the relationship between client and designer is transparent.

The practice is by no means limited to the design industry, but due to the nature of work involved, is where it is most rampant.