The problem is not so trivial and there is no easy workaround, if there is at all.
From one side we have IIS and Asp.Net time outs, and on another - SQL Server time outs. The problem lies in the way the data is stored in the database. Right now, everything should happen at once, while in the future, we will do it in chunks. The fix should be in the ORM layer.
We notice that the server capabilities also play a key role - how fast the data will be processed. On testing machines we were able to reproduce the same problem with files which are over 200mb in size. Having that said, an option might be to move the project on another server and try the same procedure.
You can also use the file system to store the data, or implement a custom provider (just like the Amazon S3) which is storing the files on external storage (file system) but keeps a reference in the module itself. You can also consider Amazon S3 usage.
I apologize for the inconvenience.
the Telerik team