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In recent years, scholars have recognized the importance of innovation for corporate performance as well as business performance. Innovation is increasingly popular and expected in modern day outsourcing relationships. In this review, this emerging phenomenon of innovation will be examined in the context of business process outsourcing (BPO). The purpose of this paper is to explore the factors of evolution of innovation in BPO sector. This study was driven by the lack of studies on the source of innovation in BPO sectors despite the importance of innovation as one of the primary sources of competitive advantage. Furthermore, as BPO organizations are serving various business processes, it could be expected that each organization could pursue and emphasize different aspects of innovation comparing to others. Therefore, the pursuit in exploring the source and factors in making innovation evolves in an outsourcing organization becomes the priority in this research. A survey questionnaire was sent, and data was gathered from 70 employees in Accenture, a BPO organization in Malaysia. Several findings were found through data analysis using SPSS tool. First, there is a significant number of respondents agree that scope of innovation and client’s expectation contributes to the evolution of innovation. The second finding indicated that there is a stronger correlation between the evolution of innovation with client’s expectation than for scope of innovation.