Garlands collapse sends shock waves around the contact centre market

More than 1,100 people have lost their jobs after the biggest call centre in the North East collapses following the loss of three of its biggest contracts in a matter of days

Garlands Call Centres, launched two decades ago by Chey Garland from the attic of her home and which grew at one point to employ more than 3,000 people, was yesterday put into administration. Almost all of its current 1,158 workforce was immediately made redundant.

Staff at its call centres in South Shields and Middlesbrough and at its Hartlepool head office learned the business had foundered after losing major contracts with Vodafone and TalkTalk. Fighting back tears, Chey, a former business woman of the year said: “I feel physically sick. This has been a desperately difficult day and I almost feel as if it’s not really happening. It’s like a dream and I feel just awful.

“My main thoughts are with my staff. We made sure we paid them on Friday but now I am wondering how they will pay their mortgages and find another job. I am absolutely shattered.”

She said the company had lost contracts as the industry had been hit by the economic downturn and had been undercut by overseas competition.

At South Shields 178 staff will lose their jobs, whilst 621 are made redundant in Hartlepool and 359 in Middlesbrough. About 70 staff have been kept on to handle one remaining contract and to carry out administrative duties. Chris Mullins, 30, was among the crowds of workers who emerged from its Hartlepool call centre yesterday worried for his future and angry that the news had been made over the in-house radio and not face-to-face.

“They were recruiting staff up until only recently,” he said. “I’m not optimistic about finding another job. Companies are going to employ people who worked at Corus before they employ a call centre worker.”

Paul Tamblingson, 31, worked as a sales adviser and had been with Garlands for five-and-a-half years. “Me and my girlfriend both work here,” he said. “She works on one of the contracts that is carrying on for a few weeks, but when that’s gone, how will we pay the mortgage?”

PricewaterhouseCoopers in Leeds has been appointed administrator.

Nick Reed, director and joint administrator, said: “Garlands Call Centres has experienced very challenging trading conditions and more recently received notice from a number of key clients of their intention to move their customer service work.

“The Garlands’ board were unable to identify a viable way forward given the significant deterioration in contract work and high infrastructure costs. As such, they were left with no option than to appoint administrators.

“My team and I will focus on working with employees, clients and suppliers to facilitate a smooth and effective wind-down or transfer of operations over the next few weeks.”

Vodafone said it was “disappointed” at the collapse of the company with which it had worked for many years.

“We have invoked our contingency plans to ensure that the service our customers receive from us is not disrupted,” said a spokesman.

A statement from TalkTalk said: “As a result of decreasing call volumes and improvements to our internal processes, contacts from customers into our customer service teams have reduced.

“Therefore we have decided to terminate our contract with our UK outsourcing partner Garlands. TalkTalk has enjoyed a very productive relationship with Garlands and our decision to terminate our contract is purely based on the changing needs of our business.”

There was widespread shock at the collapse of the company which had been seen as a star performer in the outsourcing industry which employs around one in 10 people in the North East.

Public bodies are looking to help the redundant workers who will face a battle to find more work in the sector, even with the promise of new centres opening such as Tesco Bank in North Tyneside.

One North East chief executive, Alan Clarke, said: “For over two decades Garlands Call Centres has provided significant employment across the North East. Today’s news comes as a major blow for the workforce.

“One North East is speaking with administrators PricewaterhouseCoopers on providing support to the people affected by the closures. We are already in contact with our local authority partners and Job Centre Plus to discuss the full response package that will be put in place.”

The company’s last published results to the end of 2008 show it achieved sales of £44m which was down from the previous year’s £48m and profits had fallen from £2m to £476,000.