Solutions revenue in the first quarter of 2012 was $41.2 million, an increase of $7.5 million or 22% compared with the first quarter of 2011. As a percentage of total revenue, Solutions revenue was 40% compared with 35% a year ago. The improvement in our business mix was mainly driven by revenue from more profitable healthcare projects. Staffing revenue in the quarter remained flat at $62.2 million.
First quarter revenue from IBM, our largest customer, was $28.4 million compared with $28.7 million in the first quarter 2011. As a percent of total revenue, it decreased to 27.4% in the 2012 first quarter compared with 29.9% of total revenue in the 2011 first quarter.
Revenue from our European operations was $17.2 million, a 1% increase from the $17.1 million recorded in last year’s first quarter. The effect of foreign currency fluctuations during the first quarter of 2012 decreased consolidated revenue by approximately $728,000 or 0.7%. On a local currency basis, our European revenue increased by 4.9% compared with the first quarter 2011.
Direct costs as a percentage of revenue were 78.9% in the first quarter compared with 79.4% in the first quarter of 2011. SG&A expenses as a percent of revenue decreased slightly to 15.7% from 15.8% in the first quarter 2011.First quarter operating income grew to $5.6 million, an increase of $1 million or 22% year-over-year reflecting the favorable effect of operating leverage and our higher margin Solutions work. Compared with the trailing fourth quarter of 2011, first quarter operating income increased $141,000 or 2.6%. Operating margin in the first quarter increased to 5.4% of revenue, a 60 basis point improvement from last year’s 4.8% and the same as the 5.4% operating margin in fourth quarter 2011. The year-over-year increase was primarily due to the increase in the Solutions business in our sales mix and the additional operating leverage. Read the rest of this transcript for free on seekingalpha.com