WHEN Lloyds TSB closed its Newcastle contact centre last November, with the loss of 960 jobs, it was heralded as the beginning of the end for the industry in the region.

The bank's enthusiastic embrace of offshoring - the transfer of jobs to countries with cheaper labour costs - sent a shiver down the spine of every North-East worker in the sector.

Everyone feared they would be next. But thankfully, Lloyds' transfer of work to India has proved the exception rather than the norm.

However, behind the staff protests and condemnations from politicians and unions, Lloyds TSB has been quietly growing a sister call centre site in Sunderland.

It opened in 2001 and is now operating at capacity. It employs 650 staff on three floors, including 130 former Newcastle workers.

Phil Exley, head of the centre, said: "Ideally, I would love another floor.

"We are full during normal office hours. Whether or not we expand to cover other hours depends very much on customer demand."

Newcastle, however, is still a touchy subject.

"We took a very adult, responsible attitude, and worked very closely with the unions," he said.

He pointed out that there were no compulsory redundancies from the Tyneside closure.

The group estimates that 160 staff moved to Sunderland, 51 found other jobs with Lloyds TSB, 150 went to college, and 364 found jobs elsewhere.

The rest took voluntary redundancy or retired.

The bank promised any member of staff who had not found alternative employment or taken voluntary redundancy by November would be re-deployed internally.

It also offered grants towards training of up to £2,000, on top of redundancy payments.

"The closure worked fantastically well for some people," he said.

"It has opened up different career avenues for them within the bank."

However, figures issued by Lloyds TSB Group Union (LTU) last November painted a different picture.

The union said only 18 per cent of the workforce had found jobs elsewhere in the group, either at Sunderland or in bank branches.

Forty per cent had left of their own accord, meaning 42 per cent were left jobless.

Regardless of Newcastle's woes, however, the centre at Sunderland has continued to thrive.

One knock-on effect of shipping the basic work to Mumbai, in India, has been the increase of the Wearside workforce's skills, with investment topping £4m.

The centre is ditching scripted conversations with clients and is training all staff to apply the personal touch, with freedom to talk to the bank's customers as individuals.

Last year, 12 per cent of every employee's paid time at work was spent in training.

"We are focusing on creating high quality jobs," said Mr Exley.

Management, including Mr Exley, do not have separate offices, but are based on the floor, among their staff.

Mr Exley employs a masseur to give staff head massages at their desks and has invested more than £300,000 in a new caf and cyber caf.

There are also awards for staff who go beyond their job description to help a customer.

"It is not about buying goodwill," he said. We try very hard to understand our people, and meet them half way."

The results are paying dividends.

Last year, the centre was shortlisted in every category at the North-East contact centre awards and won two.

It was also regional winner of the Remploy Positive Employer award, for developing disabled staff. This year, it is in the regional finals of the National Business Awards for Employer of the Year, taking place in Manchester next Tuesday.

Peter O'Grady, LTU assistant general secretary, hopes the centre's success will be enough to guarantee its future, but he not optimistic - Mumbai already has 1,500 staff and is growing.

"Lloyds TSB has announced that there will be 2,500 jobs over there (Mumbai) by the end of the year," he said.

"It has people doing call centre or back office-type roles, and we fear that anything up to 10,000 could eventually be handled overseas. It is fantastic that Sunderland is winning awards and they are doing exceptionally well. But we still have concerns that, if the bank looks at it on a purely financial basis, those jobs could still be at risk."

That view is not shared by Mr Exley.

"Newcastle has gone and yes, we do have offshoring, but we have spent a huge amount of money investing in people and up-skilling in Sunderland.

"It is a strategic investment and Sunderland is here to stay."