Abstract. In this work, we have studied spectral evolution of several X-ray Binaries (XRBs) containing Neutron Star (NSXBs) and Black Hole (BHXBs) during outbursts. We find that during the rising phase of outbursts, transient BHXBs and persistent BHXBs trace entirely different trajectory in the Hardness Intensity Diagram (HID) but during the decay phase, they trace similar trajectory. The path traced by NSXBs is although closer to the path followed by the persistent BHXBs but there are subtle differences. The path followed by the NSXBs during the rising phase of the outburst lies above the path that is traced during the decay phase. However, in case of persistent BHXBs these two trajectories almost overlap. We have also carried out a detailed spectral analysis to understand the actual physical mechanisms driving the movement of the source in the HID. Spectral evolution of transient and persistent BHXBs show remarkable differences. X-ray spectral evolution of persistent BHXBs and NSXBs are also substantially different. We find that the Compton cooling is caused by enhanced disk emission during the rising phase. During the decay phase electron temperature is increased due to heating of the corona. Persistent BHXBs show entirely different spectral evolution than that seen in the NSXBs suggesting a different accretion disk geometry and radiative processes.