Call centres hit by rising wages and falling sales.

Byline: Peter McCusker

THE extent of the problems facing the call centre industry have been demonstrated with results posted by the region's biggest independent operator, which show its sales falling by 10% and profits plummeting by over three-quarters.

New figures posted by Hartlepool-based Garlands, which runs four centres and employs over 2,000 people in the region, show turnover fell from pounds 48.5m to pounds 44.3m with pre-tax profits falling from pounds 2m to pounds 476,000 over the same period.

The company has grown hugely since it was founded by Chey Garland over 20 years ago from an attic room in her Middlesbrough home, and is about to establish a back office administration centre employing 500 people in South Africa.

It has cut more than 200 jobs this year after its customers Orange and Vodafone cut back their work, but has also created jobs with new contracts.

But as the recession continues to erode the business of many of the corporates for which it works, and overseas rivals continue to offer tough competition, Garlands' statement in its 2008 results highlights its concerns as well as its hopes.

"Sales activity levels have decreased over the previous year due to the cessation of a number of short-term contracts, the slow start up of a contract directly linked to the UK property market and the failure to gain the anticipated levels of new business.

"The principal risks and uncertainties affecting performance are the continued competition from abroad, where call centre wage costs can be significantly lower, and the effect of rises in the minimum wage in the UK.

"The year-end position of the company is considered to be satisfactory, with the potential for continued growth and profitability."

At the end of last year, Garlands opened a new call centre in South Shields to add to the ones it has on Teesside at Hartlepool Marina, Middlesbrough and Stockton. These centres handle 36 million customer calls every year.

The last year has not been a great one for the industry, with the banking sector suffering hundreds of job losses, and possibly many more with the integration of Lloyds TSB and HBOS, who have thousands of workers across over a dozen sites in the UK.

Concerns were raised yesterday that the merger of Orange and T-Mobile will lead to job losses in the North East, with Orange employing 5,000 people in Darlington and North Tyneside and T-Mobile 600 staff at Doxford Park, Sunderland.

In the aviation sector, the collapse of XL left hundreds of call centre staff out of work and Thomas Cook has closed a site as the market shrinks.