1





                                 UNITED STATES
                     SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C. 20549

                      --------------------------------

                                   FORM 10-Q
(Mark One)
[X]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934

           For the quarterly period ended March 30, 1997

                                       OR

[  ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934

            For the transition period from              to

                      --------------------------------

                         Commission file number:  21027

                          SOURCE SERVICES CORPORATION
             (Exact name of registrant as specified in its charter)

                       DELAWARE                       36-2690960
             (State or other jurisdiction             (I.R.S. Employer
             of incorporation or organization)        Identification No.)


             5580 LBJ FREEWAY
             SUITE 300
             DALLAS, TEXAS                                         75240
             (Address of principal executive offices)           (zip-code)

      Registrant's telephone number, including area code:   (972) 385-3002

                      --------------------------------

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) had been subject to such
filing requirements in the past 90 days.  
YES X    NO
   ----    ----

Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of  March 30, 1997

                9,134,362 shares of $.02 par value Common Stock
   2
PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                          SOURCE SERVICES CORPORATION
                                 BALANCE SHEET
                             (AMOUNTS IN THOUSANDS)

                                     ASSETS






                                                                          MARCH 30,              DECEMBER 29,
                                                                            1997                    1996
                                                                         -----------             ------------
                                                                         (UNAUDITED)
                                                                                            
Current assets:
   Cash and cash equivalents  . . . . . . . . . . . . . . . . . . . .       $18,163                 $18,849
   Accounts receivable, less allowance for doubtful accounts
      and fee adjustments of $2,787 and $2,590 respectively   . . . .        40,536                  37,018
   Deferred tax asset, net  . . . . . . . . . . . . . . . . . . . . .         1,707                   1,611
   Prepaid expenses and other   . . . . . . . . . . . . . . . . . . .           353                     268
                                                                            -------                 -------
         Total current assets . . . . . . . . . . . . . . . . . . . .        60,759                  57,746
Property and equipment, net . . . . . . . . . . . . . . . . . . . . .         7,389                   6,807
                                                                            -------                 -------
         Total assets . . . . . . . . . . . . . . . . . . . . . . . .       $68,148                 $64,553
                                                                            =======                 =======

                                           LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Accounts payable and accrued expenses  . . . . . . . . . . . . . .      $  3,961                 $ 3,796
   Accrued commissions and payroll  . . . . . . . . . . . . . . . . .        11,881                  11,684
   Accrued 401(k) plan contribution   . . . . . . . . . . . . . . . .           851                     430
   Income taxes payable   . . . . . . . . . . . . . . . . . . . . . .           982                     499
                                                                            -------                 -------
         Total current liabilities  . . . . . . . . . . . . . . . . .        17,675                  16,409
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . .           116                     116
Deferred tax - long term  . . . . . . . . . . . . . . . . . . . . . .           607                      91
                                                                            -------                 -------
         Total liabilities  . . . . . . . . . . . . . . . . . . . . .        18,398                  16,616
                                                                            -------                 -------

Stockholders' equity:
   Preferred stock, $.01 par, 2,000 shares authorized, no
      shares issued and outstanding   . . . . . . . . . . . . . . . .             0                       0
   Common stock, $.02 par, 100,000 shares authorized, 9,134,
      and 7,153 shares outstanding (includes 618 shares issued
      in 1996 to the profit sharing plan and 4,684 shares issued
      in 1996 as a stock dividend), respectively  . . . . . . . . . .           182                     182
   Capital in excess of par   . . . . . . . . . . . . . . . . . . . .        25,707                  25,707
   Retained earnings  . . . . . . . . . . . . . . . . . . . . . . . .        23,918                  22,077
   Treasury stock   . . . . . . . . . . . . . . . . . . . . . . . . .            (8)                     (8)
   Cumulative translation adjustment  . . . . . . . . . . . . . . . .           (49)                    (21)
                                                                            -------                 -------
         Total stockholders' equity . . . . . . . . . . . . . . . . .        49,750                  47,937
                                                                            -------                 -------
         Total liabilities and stockholders' equity . . . . . . . . .       $68,148                 $64,553
                                                                            =======                 =======




   The accompanying notes are an integral part of these financial statements.




                                      1
   3
                          SOURCE SERVICES CORPORATION
                       STATEMENT OF REVENUES AND EXPENSES
               (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)




                                                       THREE MONTHS ENDED       
                                                       ------------------       
                                                    MARCH 30,        MARCH 31, 
                                                      1997             1996    
                                                    --------         --------  
                                                   (UNAUDITED)      (UNAUDITED)
                                                              
Net service revenue .....................           $ 65,392         $ 40,833  
Cost of sales, flexible staffing ........             31,436           18,535  
                                                    --------         --------  
          Gross profit ..................             33,956           22,298  
                                                    --------         --------  
Operating expenses:                                                            
     Selling ............................             27,827           19,322  
     General and administrative .........              2,980            1,522  
                                                    --------         --------  
               Total operating expenses .             30,807           20,844  
                                                    --------         --------  
               Operating income .........              3,149            1,454  
Other income (expense):                                                        
     Interest income ....................                247               20  
     Interest expense ...................                (41)             (29) 
     Other, net .........................                (35)            (165) 
                                                    --------         --------  
               Income before income taxes              3,320            1,280  
                                                    --------         --------  
Income tax (expense) benefit:                                                  
    Current .............................             (1,057)            (423) 
    Deferred ............................               (422)             (55) 
                                                    --------         --------  
               Total income tax expense .             (1,479)            (478) 
                                                    --------         --------  
Net income ..............................           $  1,841         $    802  
                                                    ========         ========  
Net income per share ....................           $   0.20         $   0.11  
                                                    ========         ========  
Weighted average shares outstanding .....              9,265            7,153  
                                                    ========         ========  




   The accompanying notes are an integral part of these financial statements.



                                       2
   4
                          SOURCE SERVICES CORPORATION
                       STATEMENT OF STOCKHOLDERS' EQUITY
                             (AMOUNTS IN THOUSANDS)





                                                                                                                                 
                                                Common  Stock   Capital                Cumulative  Treasury  Stock        Total   
                                                -------------- in Excess   Retained    Translation ---------------    Stockholders'
                                                Shares  Amount  of Par     Earnings    Adjustment   Shares   Cost        Equity   
                                                ------  ------  ------     --------    ----------   ------   ----        ------   
                                                                                                       
December 29, 1996. . . . . . . . . . . . . .    9,134   $182   $25,707    $22,077       $   (21)         1   $     (8)   $47,937    
  Net income . . . . . . . . . . . . . . . .                                1,841                                          1,841    
  Foreign currency translation adjustment. .                                                (28)                             (28)   

                                                                                                                                  
March 30, 1997 . . . . . . . . . . . . . . .    9,134   $182   $25,707    $23,918       $   (49)         1    $    (8)   $49,750    
                                              ======= =======  =======    =======       =======     =======   =======    =======







   The accompanying notes are an integral part of these financial statements.



                                       3
   5
                          SOURCE SERVICES CORPORATION
                            STATEMENT OF CASH FLOWS
                             (AMOUNTS IN THOUSANDS)



                                                              THREE MONTHS ENDED
                                                           ------------------------
                                                           MARCH 30,       MARCH 31,   
                                                             1997            1996      
                                                           --------        --------   
                                                          (UNAUDITED)    (UNAUDITED)  
                                                                             
Cash flows from operating activities:                                                 
     Net income ........................................   $  1,841        $    802   
     Adjustments to reconcile net income to net cash                                  
        provided by (used in) operating activities:                                   
          Depreciation and amortization ................        573             216   
          Profit Sharing Plan stock contributions ......          0              12   
          Deferred tax asset, net ......................        (96)            (28)  
          Deferred tax liability, net ..................        516              83   
          Loss on asset sales ..........................          1               6   
     (Increase) in assets:                                                            
          Accounts receivable ..........................     (3,518)         (1,108)  
          Prepaid expense ..............................        (85)           (164)  
     Increase (decrease) in liabilities:                                              
          Accounts payable and accrued expenses ........        165           1,178   
          Accrued commissions and payroll ..............        197          (3,744)  
          Accrued 401(k) plan contribution .............        421             251   
          Accrued contribution to profit sharing plan ..          0              (6)  
          Income taxes payable .........................        483            (171)  
          Other liabilities ............................        (26)            (70)  
                                                           --------        --------   
               Net cash provided by (used in) operating                               
                  activities ...........................        472          (2,743)  
                                                           --------        --------   
                                                                                      
Cash flows from investing activities:                                                 
     Expenditures for property and equipment ...........     (1,161)         (1,002)  
     Proceeds from sales of property and equipment .....          3               6   
                                                           --------        --------   
               Net cash (used in) investing activities .     (1,158)           (996)  
                                                           --------        --------   
                                                                                      
Cash flows from financing activities:                                                 
     Borrowings from revolving line of credit ..........          0          16,130   
     Repayments of revolving line of credit ............          0         (13,345)  
                                                           --------        --------   
               Net cash provided by financing                                         
                  activities ...........................          0           2,785   
                                                           --------        --------   
Net (decrease) in cash and cash equivalents ............       (686)           (954)  
Cash and cash equivalents at beginning of period .......     18,849           1,388   
                                                           --------        --------   
Cash and cash equivalents at end of period .............   $ 18,163        $    434   
                                                           ========        ========   
                                                                                      
Supplemental Cash Flow Information                                                    
- ----------------------------------                                                    
Cash paid during the period for :                                                     
     Interest ..........................................   $     41        $     29   
                                                           ========        ========   
     Income Taxes ......................................   $    340        $    592   
                                                           ========        ========   







   The accompanying notes are an integral part of these financial statements.




                                       4
   6
                          SOURCE SERVICES CORPORATION
                         NOTES TO FINANCIAL STATEMENTS
               (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

NOTE 1 --- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 Nature of business

   Source Services Corporation (the Company), which operates in a single
business segment for generally accepted accounting principle reporting
purposes, places experienced personnel in the fields of information technology,
accounting, finance, engineering, law and health care through its divisions:
Source Edp, Source Finance, Source Engineering, Source Manufacturing, Source
Consulting, Accountant Source Temps, Source HealthCare Staffing and Source
Legal.

   Interim financial information

   The financial statements have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission ("SEC") and, in
management's opinion, include all adjustments, consisting only of normal
recurring adjustments, necessary for a fair statement of results for such
interim periods.  Certain information and note disclosures normally included in
annual financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to SEC rules or
regulations; however, the Company believes that the disclosures made are
adequate to make the information presented not misleading.  These financial
statements should be read in conjunction with the financial statements and
notes thereto included in the Company's Form 10-K for the fiscal year ended
December 29, 1996.  Operating results for the three month period ended March
30, 1997, are not necessarily indicative of the results that may be expected
for the fiscal year ended December 28, 1997.

 Management estimates

   The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period.  Actual results could differ from those estimates.

 Revenue recognition

   Revenue for the placement of personnel on a permanent basis is recognized on
the date the employer and individual mutually agree to an offer and acceptance
of employment.  If the individual fails to continue employment for a period of
time as specified in the placement agreement, generally a thirty- to ninety-day
period, the Company is not entitled to collect the placement fee.  Revenue from
permanent placements is shown on the Statement of Revenues and Expenses net of
amounts written off for adjustments due to placed candidates not remaining in
employment for the Company's guarantee period.  Revenue derived from flexible
staffing is recognized as services are performed by the Company's employees.
Revenue from flexible staffing on the Statement of Revenues and Expenses
represents gross billings less amounts written off.  The Company maintains an
allowance for potential fee adjustments and uncollectible accounts.

 Cash and cash equivalents

   Cash and cash equivalents include cash on hand and in banks and overnight
investments.  Overnight investments in Eurodollars were $8,300 and $4,500 at
March 30, 1997 and December 29, 1996, respectively.

 Treasury stock

   Treasury shares acquired are held for future reissuance.  Treasury shares
are recorded at cost of acquisition.  Reissued shares are relieved using the
average cost method.



                                      5
   7
 Property and equipment

   Furniture and equipment is stated at cost and is depreciated on a
straight-line basis over estimated useful lives, ranging from three to seven
years.  Leasehold improvements are stated at cost and are amortized on a
straight-line basis over the shorter of the lease term or the estimated useful
life of the improvements.

 Self-insurance

   The Company offers an employee benefit program for which it is self-insured
for a portion of the cost.  The Company is liable for claims up to $100 per
employee and aggregate claims up to a defined yearly payment limit.  All
full-time employees and salaried consultants are eligible to participate in the
program.  Self-insurance costs are accrued using actuarial estimates to
approximate the liability for reported claims and claims incurred but not
reported.

 Fair value of financial instruments

   Statement of Financial Accounting Standards (SFAS) No. 107, "Disclosure
About Fair Value of Financial Instruments," requires the disclosure, to the
extent practicable, of the fair value of financial instruments which are
recognized or unrecognized in the balance sheet.  The carrying amounts of the
Company's financial instruments, primarily cash, investments, and short-term
trade receivables and payables, approximate fair value.

 Income taxes

   The Company accounts for income taxes under the principles of SFAS No. 109,
"Accounting for Income Taxes."  SFAS No.  109 requires an asset and liability
approach to the recognition of deferred tax assets and liabilities for the
expected future tax consequences of differences between the carrying amounts
and the tax bases of other assets and liabilities.

 Foreign currency translation

   Foreign currency translation adjustments arise primarily from activities of
the Company's Canadian operations.  Results of operations are translated using
the average exchange rates during the period, while assets and liabilities are
translated into U.S. dollars using current rates.  Resulting foreign currency
translation adjustments are recorded in stockholders' equity.

 Earnings per share

   Earnings per share is computed by dividing net income by the weighted
average number of common stock and common stock equivalents outstanding during
the year.   Common stock equivalents consist of stock options.

NOTE 2 --- EQUITY

   The Company issued 15,000 options on January 2, 1997.  These options were
issued at an exercise price of $17.50, the closing market value on the date of
issuance.  These options vest over four years:  1/3 on January 3, 1999, 1/3 on
January 3, 2000, and 1/3 on January 3, 2001.  No compensation expense was
recorded in connection with the issuance of these options.

NOTE 3 --- NEW ACCOUNTING STANDARD

   In February 1997, SFAS No. 128 "Earnings Per Share" was issued effective for
interim and annual periods ending after December 15, 1997.  SFAS No. 128
establishes new standards for computing and presenting earnings per share.  If
the Company had computed earnings per share in accordance with SFAS No. 128,
pro forma basic and diluted earnings per share for the three month periods
ended March 30, 1997 and March 31, 1996, would have been $0.20 and $0.11,
respectively.




                                      6
   8
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

   This Form 10-Q includes certain "forward looking" statements, within the
meaning of the Private Securities Litigation Reform Act of 1995, which reflect
the Company's current expectations regarding the future results of operations,
performance and achievements.  Source Services Corporation has tried, wherever
possible, to identify these "forward looking" statements by using words such as
"anticipate," "believe," "estimate," "expect" and similar expressions.  These
statements reflect the Company's current beliefs and are based on information
currently available to it.  Accordingly, these statements are subject to risks
and uncertainties which could cause the Company's actual results, performance
or achievements to differ materially from those expressed in, or implied by
these statements.  These risks and uncertainties include the following:
economic activity in the United States and in the regions of the country in
which the Company operates; the Company's ability to attract and retain
qualified personnel; the Company's ability to maintain and protect its
information processing systems and proprietary technology; the achievement and
management of growth by the Company through internal expansion in current
markets; the retention of key management personnel and qualified sales
associates; exposure to employment liability risk; competition in the Company's
current and potential target markets; and changes in legislative or regulatory
requirements.  Readers are encouraged to review the Risk Factors Section of the
Company's Form S-1 dated July 29, 1996 for a more complete description of these
factors.  The Company is not obligated to update or revise these "forward
looking" statements to reflect new events or circumstances.

   The following discussion should be read in connection with the Company's
Financial Statements and the related Notes thereto included elsewhere in this
document.

RESULTS OF OPERATIONS

Three-Month Period Ended March 30, 1997, compared to the Three-Month Period
Ended March 31, 1996

   Net Service Revenue.  Net service revenue for the three month period ended
March 30, 1997 increased 60.1% to $65.4 million, from $40.8 million for the
three month period ended March 31, 1996.  The growth in net service revenue was
primarily attributable to the Company's continued focus on expanding its
flexible staffing service offerings in existing markets.

   Net service revenues from flexible staffing services grew 67.8% to $43.4
million for the three months ended March 30, 1997, from $25.9 million for the
three months ended March 31, 1996.  The growth in flexible staffing net service
revenue is primarily due to an increase in the hours billed from adding
additional markets and growth in existing markets and, to a lesser extent, an
increase in the average billing rates.  Permanent placement net service revenue
increased 46.9% to $22.0 million for the three months ended March 30, 1997,
from $15.0 million for the three months ended March 31, 1996.  The growth in
permanent placement net service revenue is primarily the result of an increase
in the number of permanent placements and, to a lesser extent, an increase in
the average placement fees.

   Gross profit. Gross profit increased 52.3% to $34.0 million for the three
months ended March 30, 1997, from $22.3 million for the three months ended
March 31, 1996.  Gross profit as a percentage of net service revenues decreased
slightly to 51.9% for the three months ended March 30, 1997, from 54.6% for the
three months ended March 31, 1996.  The decrease was primarily a result of a
continued change in the mix of the Company's net service revenue toward
flexible staffing.

   Operating expenses.  Operating expenses increased 47.8% to $30.8 million for
the three months ended March 30, 1997, from $20.8 million for the three months
ended March 31, 1996.  The increase was primarily a result of hiring additional
operations employees, increased expenses associated with the expansion of the
Company's business, and upgrades in the Company's management information
system.  As a percentage of net service revenue, operating expenses decreased
to 47.1% for the three months ended March 30, 1997, as compared to 51.0% for
the three months ended March 31, 1996.




                                      7
   9
   Operating Income.  Operating income increased 116.6% to $3.1 million for the
three months ended March 30, 1997, from $1.5 million for the three months ended
March 31, 1996.  The increase is primarily a result of the factors described
above.

   Other (income) expense.  Other (income) expense was $0.2 of income for the
three months ended March 30, 1997, compared to $0.2 of expense for the three
months ended March 30, 1996.

   Income Taxes.  The effective tax rate was  44.6% and 37.3% for the three
months ended March 30, 1997 and March 31, 1996, respectively.

   Net Income.  Net income increased to $1.8 million for the three months ended
March 30, 1997, from $0.8 million for the three months ended March 31, 1996, as
a result of the factors described above.

LIQUIDITY AND CAPITAL RESOURCES

   As of March 30, 1997, the Company's sources of liquidity included
approximately $43.1 million in net working capital.  In addition, as of March
30, 1997, $10.0 million was available for borrowing under the Company's line of
credit.

   During the first three months of 1997, cash flow provided by operations was
approximately $0.5 million, resulting primarily from an increase in accounts
receivable, an increase in income taxes payable and accounts payable and
accrued expenses.

   During the first three months of 1997, cash flow used by investing
activities was approximately $1.2 million, resulting primarily from
expenditures for computer equipment and office furniture and fixtures.


PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS
         None

ITEM 2.  CHANGES IN SECURITIES
         None

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES
         None

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
         None

ITEM 5.  OTHER INFORMATION
         None

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

        (a)  Exhibits
             (27) Financial Data Schedule

        (a)  Reports on Form 8-K
             None




                                      8
   10
SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

May  13, 1997

Source Services Corporation
(Registrant)


By:    /s/ Richard Dupont
   ---------------------------------------------
         Richard Dupont, Chief Financial Officer
         and Secretary
   11
                                EXHIBIT INDEX







Exhibit                                
Number                 Description
- ------                 -----------
              
  27             Financial Data Schedule