I have a web service written in C# that is living on a SharePoint site. I have modified the web.config with the following code:
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After creating your client specifying the binding and endpoint address, you can assign an OperationTimeout,
client.InnerChannel.OperationTimeout = new TimeSpan(0, 5, 0);
Try setting the timeout value in your web service proxy class:
WebReference.ProxyClass myProxy = new WebReference.ProxyClass();
myProxy.Timeout = 100000; //in milliseconds, e.g. 100 seconds