Pomeroy IT Solutions (NASD: PMRY) said its third-quarter technical staffing revenue was up 42.2% to $28.3 million, up from $19.9 million generated in the same quarter in 2007. Revenue for this division fell by $3.3 million on a sequential basis, 13.2%, to $28.3 million from the second quarter.

Pomeroy said the year-over-year increase came because it now recognizes revenue on gross billings of personnel instead of fee-based services in its vendor management business as it shifted to use of employees instead of subcontractors.

The Hebron KY-based information technology services and staffing company said technical staffing revenue will fall further because it chose not to renew a contract with a major customer as proposed new terms would not have been profitable. Pomeroy estimates fourth-quarter technical staffing revenue to be between $9 million and $11 million.

Third-quarter gross margin in the company's technical staffing business slipped to 12.3% from 14.3%.

Total third-quarter revenue at Pomeroy rose 0.6% to $145.2 million.