''Request channel timeout''

I have a web service that I call from an application, running on XP machine. With 128 threads, the application runs fine. With 256 threads, the application starts returning HTTP request channel timed out like so "'The request channel timed out while waiting for a reply after 00:00:02.1500000. Increase the timeout value passed to the call to Request or increase the SendTimeout value on the Binding. The time allotted to this operation may have been a portion of a longer timeout.'" I ran the test from a server 2008 R2 machine and it encounters the same limit. I need to know if this is a client side or a server side problem and what metrics to look at to confirm this. So far, it sounds like it's a server side issue. Also, need to resolve the issue - what settings to change, what fixes need to be made, etc. I've tried the solutions online, they do not help. Please give a flat rate of the price to help me resolve this bug.