Innovation is reshaping the corporate culture of organizations in this present age of competency and service legacy. Innovation in services is getting recognition from the top executives due to its strategic importance and globalize competition, which has escalated the demand of better change and adoption of best practices through change in processes. This research is based on innovation management in service industry of Pakistan according to the prevailing corporate environment and strategies to sustain or have potential competitiveness to meet the standards of the ever changing market. Organizations are considering innovative ideas as their potential informational resource along with financial and non financial resources. Almost 80% of the IT sector and 60%of the banking sector has embedded the innovation concepts in their organizational hierarchy to get optimum utilization of resources and benefits through market and organizational performance. Innovation is the core competency factor for every market oriented approach.