Purpose of External Identities
Modern organizations rarely operate in isolation. They often need to collaborate securely with external partners, such as vendors, suppliers, contractors, or consultants.
Microsoft Entra External Identities enables this collaboration by allowing users from outside your organization to securely access your applications, resources, and data — without needing to create and manage separate internal accounts.
This is achieved through Microsoft Entra B2B (Business-to-Business) collaboration, which provides a framework for granting controlled access to external users.
Why External Identities Matter
Secure Collaboration – Partners and vendors can access shared files, Teams, SharePoint, or line-of-business apps while still using their own credentials.
Reduced Administrative Overhead – Admins don’t need to manually create and manage external user accounts.
Consistent Security Policies – Conditional Access, MFA, and auditing apply equally to external and internal users.
User Experience – External users sign in with their own organization’s credentials, avoiding password fatigue or duplicated accounts.
What You’ll Learn in This Module
This module focuses on how to configure, manage, and secure B2B collaboration scenarios:
Inviting and managing guest users (individually and in bulk).
Configuring collaboration restrictions and invitation policies.
Setting up identity providers such as Google or Facebook for non-Microsoft accounts.
Managing cross-tenant access for B2B Direct Connect and shared Teams channels.
Using Entra Verified ID to issue and verify digital credentials.
Real-World Example
Scenario:
Contoso Ltd partners with Fabrikam Inc. for product development. Instead of creating new accounts for Fabrikam employees in Contoso’s directory, Contoso uses Microsoft Entra B2B collaboration.
Fabrikam employees use their existing company accounts to sign in.
Contoso admins assign permissions via groups or Conditional Access policies.
Contoso retains full control — if a contract ends, removing the Fabrikam guest accounts instantly revokes access.
This is a practical, secure, and scalable collaboration model that fits both business and IT needs.
Exam Tip
When you see terms like:
External Identities → umbrella feature for collaborating with users outside your org.
B2B collaboration → enables secure sharing with external users using their own credentials.
B2C (Business-to-Consumer) → separate service for customer-facing apps (not part of B2B).
Remember: Microsoft Entra B2B focuses on external partners, not customers.
Summary
This unit introduced the concept of secure external collaboration using Microsoft Entra External Identities.
It sets the foundation for understanding B2B collaboration, user types, and how to configure secure invitations and access control.