Sylvia Written by Sylvia Vorhauser-Smith, PageUp Senior Vice President, Research.

This article was originally published on Forbes.

Just back from the book launch of Talented Philippines in bustling metro Manila – selfie capital of the world and the second fastest growing Asian economy behind China. The experience is at once exhilarating and earthing – the possibilities in the Philippines appear endless, the challenges daunting.

At the outset of writing the book, Talented Southeast Asia, co-author Karen Cariss and I quickly recognized that not only did the entire region have a specific talent management footprint, but so did each country within it. And each warranted its own in-depth analysis. We decided to dive deeper into country-specific nuances that make up this vibrant and diverse region. First up, the Philippines.

Rich in culture and natural beauty, the Philippines is home to some of the most inspiring and promising talent in the world. That talent is already demonstrated by Filipinos in companies around the globe and yet, it is only just a taste of what is possible and what is still to come. The Philippines has an enormous amount to offer for multinational corporations looking to expand into the region.

Several data points exemplify the tremendous growth potential for the Philippines:

  • A Filipino baby is born every 18 seconds, adding 2 million people to the population each year. By 2020, the population is expected to reach 110 million.
  • The economy is growing at a steady rate, and the gross domestic product (GDP) is forecast to grow a solid 6% through 2018.
  • The workforce has increased by 22% in the past decade and now totals 44 million workers.
  • Workers are moving away from agriculture and shifting into the service sector, which employed 52% of workers in 2010, up 28% since 1995.
  • The Philippines continues to have the youngest population demographic in the world, with a median age of 23.2 years.

Clearly, growth and the Philippines go together like white and rice. While there are distinct business implications associated with this economic growth, MNCs also need to consider a number of other factors in order to be successful in the Philippines.

The Impact of the AEC

It is the dawn of a new era for the Association of Southeast Asian Nations (ASEAN), which comprises Singapore, Malaysia, Thailand, Philippines, Indonesia, Vietnam, Cambodia, Lao PDR, Myanmar and Brunei Darussalam. At the beginning of 2016, the ASEAN Economic Community (AEC) will officially launch and create one global economic force of reckoning.

Designed to merge the disparate power and representation of its individual members, the AEC promises to be a regional game-changer that will fuel intra-regional trade and encourage a significantly freer flow of skilled labor. The International Labour Organization (ILO) estimates that the AEC could add an additional 3.1 million jobs to the Philippines economy, with many of those positions available for highly skilled workers such as managers, professionals and technicians.

For global employers, the AEC will usher in a transformation not only of workplace design, but also of mindsets. The inevitable rise in remote and virtual workers will create demand for agile work environments, and technology will serve as the backbone for enhanced workplace collaboration.

Talent as a Limited Resource

As a result of the changes caused by the introduction of the AEC, in particular the ease with which workers can move from one country to another, the competition in the talent market will remain fiercely competitive. Nations that are able to respond with robust policies and supporting infrastructure will benefit the most from this free flow of labor.

If talent is to be considered a national resource, then countries must determine if they are in surplus or deficit. Countries whose workplace environment is less attractive than that of their neighbors will find themselves in the role of net exporters of talent. By actively addressing workplace reforms to increase their attractiveness, governments can reduce their talent outflows and likely become net importers of the region’s talent.

The Philippines’ successful history of a large labor force working abroad, as well as its strong government support and policy infrastructure, is a point of advantage with the cross-border employment opportunities that the AEC will engender. But, the resulting shrinkage of the talent pool within the Philippines will leave employers scrambling to hire among the talent that remains.

BPO Growth Exemplifies Opportunity in the Philippines

The growth achieved in the business process outsourcing (BPO) sector in the Philippines over the past decade has been impressive. In 2006, the Philippines held just 5% of the global market share for BPO services, employing 240,000 Filipinos. By 2014, one million Filipinos worked in the sector and the country’s share of the global BPO market had doubled to 10%. Estimates show that the BPO industry in the Philippines is expected to employ 1.3 million Filipinos and represent US$25 billion in annual revenues by 2016.

Although voice-based customer contact centers still dominate the BPO sector in the Philippines, more complex services are increasingly gaining attention. The Philippines has become a go-to destination for BPO services for a number of reasons, including strong government support, a reliable and affordable infrastructure, and a large youthful workforce with strong English skills. Labor affordability also plays a role, with Filipino BPO workers earning substantially less than their counterparts in other parts of the world.

Opportunity Knocks

There is no shortage of opportunities in the Philippines. If the growth of the country can be realized in a way that will sustainably embed prosperity for the long term, then the Philippines can gain a competitive edge over other countries in the region. Multinational corporations looking to take advantage of the great promise of this flourishing nation and its talented, hard-working people must prepare now to ensure that their business and talent management practices can adapt to the fast-paced growth of this dynamic country.

No matter the region or the business itself, talent management software is integral to success, whether to develop great leaders or to recruit the right talent that’ll keep you one step ahead of the competition.