Pittsburgh-based IT staffing firm Mastech Holdings Inc. (NYSE MKT: MHH) reported third-quarter revenue rose 1.2 percent year over year to $28.6 million.

Demand for IT staffing services remained in-line with activity levels of a quarter ago, according to the company, and Mastech increased its billable consultant base by approximately 4 percent as the ratio of new assignment wins-to-activity levels rose during the recent quarter. However, compensation increases in excess of bill rate increases and slightly lower margins on new assignments in its wholesale channel impacted overall margins during the quarter.

Gross margin for the third quarter narrowed to 18.3 percent from 18.9 percent in the year-ago quarter.

Mastech reported third-quarter net income fell 40.6 percent to $879,000 from $1.5 million in the third quarter of last year, which included $481,000 in net income from discontinued operations.

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“I'm pleased to report that we have essentially recovered all of our billable consultant headcount that was lost in the surprise project termination during the previous quarter,” said CEO Kevin Horner. “As I communicated in our last earnings call, third quarter’s revenue and gross profit performance would be impacted by this unexpected project termination. As a result of this recovery, we were able to achieve 4 percent sequential growth in both revenues and billable consultants during the third quarter. Additionally, we continued to invest for growth during the quarter by ramping-up the production side of our business with the aggressive hiring of recruitment resources at both of our facilities in India and sales staff in the US. While these hires constrained our bottom-line results in the third quarter, they will allow us to better service the demand side of our business going forward.”

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Share price and market cap

Shares in Mastech rose 11.11 percent in late morning trading to $9.50 and Mastech has a market cap of approximately $40.92 million, according to Yahoo!