User & Group ManagementExternal Identities & Guest Access

External Identities & Guest Access

25 mins

Understanding the Concept

Microsoft Entra External ID enables organizations to collaborate securely with partners, vendors, and customers. B2B collaboration allows you to invite external users as guests into your tenant, granting them controlled access to specific resources.

Guest users can authenticate using their own organization's credentials (if they have Entra ID or Google), a one-time passcode via email, or a Microsoft account. This means partners don't need to create separate credentials for your organization.

External collaboration settings control who can invite guests, which domains are allowed/blocked, and what level of access guests receive. Proper configuration balances collaboration needs with security requirements.

Key Points

  • B2B collaboration: Invite external users as guests in your tenant
  • B2C: Customer-facing identity for apps (separate product)
  • Guest users sign in with their own credentials (federated, OTP, or MSA)
  • Cross-tenant access settings control inbound/outbound collaboration
  • External collaboration settings govern invitation permissions and domain restrictions

External Identity Flow

Step 1

Invite Guest

Admin or user sends B2B invitation to external email

Step 2

Redemption

Guest redeems invitation using their identity provider

Step 3

Authentication

Guest authenticates via federation, OTP, or Microsoft account

Step 4

Access Granted

Guest accesses permitted resources per policy

Step 5

Governance

Access reviews ensure ongoing appropriateness

Why This Matters in Real Organizations

Modern business requires collaboration across organizational boundaries. Without proper external identity management, organizations resort to creating internal accounts for partners (security risk) or using shared credentials (audit nightmare). B2B collaboration provides secure, auditable external access.

Common Mistakes to Avoid

Creating internal accounts for external partners instead of using guest access
Not restricting which domains can be invited
Forgetting to set up access reviews for guest users
Allowing all users to invite guests without governance

Interview Tips

  • Explain B2B vs B2C scenarios and when to use each
  • Discuss cross-tenant access settings for multi-org scenarios
  • Mention guest user lifecycle management and cleanup

Exam Tips (SC-300)

  • Know the guest user authentication options
  • Understand external collaboration settings and domain restrictions
  • Know how cross-tenant access policies work

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