External User Access in SharePoint Online

SharePoint Online supports several types of participation by external users without the need for additional licenses. These access categories can help organizations work with off-site contractors, vendors, and other business partners to maintain sites, documents, and libraries without purchasing additional licenses. However, organizations should plan guest access policies carefully before implementing them, paying attention to data security, compliance, and manageability features, some of which could require the purchase of additional Microsoft services.

What Makes an External User?

In licensing terms, external users are individuals accessing an organization’s on-premises systems or online services tenancy who are neither employees of the licensed organization nor vendors, contractors, or agents working on the organization’s physical premises.

Customers are often told that an off-site vendor, contractor, or agent can only be considered an external user if their time is shared between multiple customers, although this is not stated explicitly in the Microsoft Volume Licensing Product Terms.