May 28, 2025
Blog
Hey everyone,
Over the past few months, I’ve been asked a recurring question:
What’s the difference between a Workforce Tenant and an External Tenant in Microsoft Entra?
And how does that tie into B2B vs. B2C?
It’s a topic that’s become increasingly important, especially with recent changes in Microsoft’s identity strategy. This blog post will walk you through the key differences, clarify some common misconceptions, provide relevant use cases, and include a technical comparison of supported features.
What is a Workforce Tenant?
A Workforce Tenant refers to the standard Microsoft Entra ID tenant (formerly Azure AD), used to manage identities for employees, partners, contractors, and other organizational users. It supports a broad set of enterprise features, including:
Single sign-on (SSO)
Conditional Access
Identity Governance
Multi-Factor Authentication
Device compliance
Risk-based access policies
It also supports B2B collaboration — allowing you to invite and manage external identities securely within your own tenant, using their existing credentials from other Entra tenants or identity providers like Google.
This is the recommended and modern approach for secure collaboration across organizations.
What is an External Tenant?
Historically, Microsoft offered a separate identity platform called Azure AD B2C, optimized for consumer-facing applications. These tenants are commonly referred to as External Tenants, and they were designed to support:
Customer identity and access management (CIAM)
Social login (Google, Facebook, Apple)
Email/password authentication
Custom-branded login experiences
Self-service sign-up and password reset
These tenants were entirely separate from a company’s Workforce Tenant and maintained their own isolated user directories and policies.
Why is there confusion?
The confusion stems from the fact that both models deal with external users, but the nature of those users is very different.
Type of User | Identity Model | Platform |
|---|---|---|
Business partners | B2B collaboration | Workforce Tenant (Entra ID) |
Contractors | B2B collaboration | Workforce Tenant (Entra ID) |
App customers | B2C identity mgmt | External Tenant (Azure AD B2C) |
With the rise of Entra External ID, Microsoft is now enabling support for customer identity scenarios within Workforce Tenants, effectively replacing the need for standalone Azure AD B2C tenants.
Use Cases
Workforce Tenant Use Cases (B2B):
Granting access to internal applications for partners or contractors
Sharing SharePoint or Teams resources with guest users
Enabling federated login via Google or SAML for workforce access
Managing external identities under Conditional Access and MFA
External Tenant Use Cases (B2C):
Allowing customers to sign up with Facebook or Apple ID to your mobile app
Building a custom-branded login portal for a SaaS product
Managing millions of customer identities independently from internal systems
Azure AD B2C Is Reaching End of Life
Microsoft is phasing out Azure AD B2C in favor of Entra External ID, which allows you to onboard both internal and external users directly into your Workforce Tenant using OpenID Connect, SAML, or federated identity providers.
Key advantages:
Unified governance and security across all user types
Native support for Conditional Access and Identity Protection
Centralized audit and compliance
No more managing two separate tenants or policy engines
Technical Comparison: Workforce Tenant vs. External Tenant
Capability | Workforce Tenant (B2B) | External Tenant (Azure AD B2C) |
|---|---|---|
Supported Identity Providers | Microsoft, Google, Facebook, SAML, OIDC | Microsoft, Google, Facebook, Apple, Email/Password |
Identity Types | B2B guest users | Local accounts, social logins |
Conditional Access | Fully supported | Partial (via Identity Experience Framework) |
Multi-Factor Authentication | Entra MFA and Identity Protection | Limited support |
Device Compliance | Supported via Intune + CA | Not supported |
Lifecycle Management | Access reviews, entitlement mgmt | Not supported |
Branding and Customization | Basic (logo, colors) | Full (custom HTML, JS, CSS) |
User Journey Customization | Limited | Full via custom policies |
Token Customization | Basic | Advanced customization |
Federation (SAML, OIDC) | In public preview | Supported |
Application Scale | Enterprise-grade | Internet-scale (millions of users) |
Access Auditing and Logs | Unified with Microsoft 365 | Separate diagnostic pipeline |
Licensing | Entra ID P1/P2, MAU-based | B2C-specific MAU licensing |
Reference: Microsoft Learn – Supported features for Entra External ID
https://learn.microsoft.com/en-us/entra/external-id/customers/concept-supported-features-customers
Summary
Workforce Tenants are now the unified platform for managing both workforce and external identities.
Azure AD B2C is effectively in maintenance mode — new investments are focused on Entra External ID.
Use B2B for collaboration and External ID within your Entra tenant for customer identity scenarios.
Aligning everything under one tenant simplifies governance, compliance, and operational overhead.
If you’re currently managing customer apps in Azure AD B2C, it’s time to start evaluating the migration path to Entra External ID.
We’re actively helping organizations make that transition — feel free to reach out if you’d like to discuss architecture, risks, or implementation strategy.