GARLANDS founder Chey Garland said she felt "physically sick" when announcing to staff her company had been placed into administration.
Over 20 years she had turned the business into the biggest contact centre in North East England, employing more than 1,100 people – 178 of them in South Shields.
But it has now collapsed after the loss of three of its biggest contracts in a matter of days, including Vodafone and TalkTalk.
At its peak, Garlands employed more than 3,000 people, but yesterday almost all of its workforce was made redundant.
Ms Garland made an emotional speech when announcing the administration.
She said: "I feel physically sick. This has been a desperately difficult day and I almost feel as if it's not really happening.
"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 undercut by overseas competition.
PricewaterhouseCoopers 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."
South Tyneside Councillor Michael Clare, lead member for jobs, enterprise and regeneration, said: "We are saddened to hear of these redundancies and are already working with our partners so that we can put support in place for people who are affected by this.
"We are also doing all we can to create the right environment for job creation in South Tyneside."
Returning Beacon and Bents ward councillor John Wood said: "This is desperately sad news for the people involved."
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."
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.