Microsoft Entra ID provides two distinct identity management solutions tailored for specific scenarios Entra ID Workforce is designed for managing the identities of an organization’s internal users including employees and partners Conversely Entra External ID for Customers is intended for managing the identities of external users such as customers and business partners who interact with an organization’s applications and services A thorough understanding of the technical characteristics of each solution is essential for architects and engineers to make well-informed decisions This document provides a technical comparison of these two offerings across key areas including on-premises synchronization API access licensing conditional access features and inherent limitations.
Table of Contents
On-Premises Synchronization Mechanisms
Entra ID Workforce
Entra ID Workforce offers robust capabilities for hybrid identity implementations utilizing Entra ID Connect or Entra ID Connect Cloud Sync to synchronize identity data from on-premises Active Directory Domain Services AD DS to the cloud This synchronization encompasses user accounts groups attributes and password information facilitating a unified identity management framework For password management password hash synchronization PHS enables the synchronization of password hashes to Entra ID allowing users to employ the same credentials for both on-premises and cloud resources Alternatively pass-through authentication PTA permits direct authentication against on-premises AD when accessing cloud resources without password hash synchronization Federation via Active Directory Federation Services ADFS or other Security Assertion Markup Language SAML based identity providers is also a mature option providing a highly customizable hybrid identity solution Entra ID Connect offers granular control over the scope of synchronization including organizational units and attributes while Cloud Sync provides a streamlined configuration suitable for less complex environments
Entra External ID for Customers
Entra External ID for Customers adopts a different strategy for managing external user identities It does not natively support direct synchronization with on-premises AD DS The platform is primarily focused on delivering a scalable and secure cloud-native identity service for customers who typically do not possess accounts within the organization’s internal AD infrastructure Instead Entra External ID for Customers supports a variety of identity providers including social identity providers such as Google Facebook and Microsoft accounts as well as authentication based on email addresses and passwords Business-to-Business B2B collaboration features also enable the invitation of external users as guests into the customer tenant While direct on-premises synchronization is not a standard feature organizations may explore custom solutions or third-party identity management platforms for integration if required However the architectural emphasis is on a cloud-centric model for customer identities minimizing reliance on on-premises infrastructure
Comparison Table On-Premises Synchronization
| Feature | Entra ID Workforce | Entra External ID for Customers |
| Direct AD DS Synchronization | Yes via Entra ID Connect and Cloud Sync | No inherent support |
| Password Hash Synchronization PHS | Yes | Not applicable Primarily cloud-native |
| Pass-Through Authentication PTA | Yes | Not applicable Primarily cloud-native |
| Federation ADFS SAML | Yes | Not the primary approach but available |
| Granular Synchronization Control | Yes Entra ID Connect | Limited focus, to some extend with API’s |
| Cloud Sync Option | Yes | No |
| Social Identity Providers | Primarily for B2B guest scenarios | Yes Native support |
| Email Password Authentication | Yes | Yes Native support |
| B2B Collaboration | Yes | Yes |
API Access and Integration
Entra ID Workforce
Entra ID Workforce provides comprehensive API access through the Microsoft Graph API This robust API allows programmatic management of users groups applications devices and various other directory objects and features within the Entra ID tenant Organizations can utilize the Microsoft Graph API for tasks such as user provisioning and de-provisioning automation of group membership management enforcement of security policies and integration of identity data with other enterprise systems The API supports standard authentication protocols including OAuth 2.0 and offers fine-grained permission management through Entra ID roles and application permissions This extensive API ecosystem facilitates deep integration and automation for managing internal identities and access privileges
Entra External ID for Customers
Entra External ID for Customers also offers API access with a focus on managing external customer identities and authentication processes The Microsoft Graph API serves as the primary interface with a subset of endpoints relevant to customer identity management functionalities This includes features such as user registration sign-in profile management password reset multi-factor authentication MFA policy configuration and integration with custom identity providers Furthermore Entra External ID for Customers leverages the Identity Experience Framework which enables highly customized authentication and authorization flows defined through XML based policy files These policies can be managed and interacted with programmatically via specific API endpoints allowing organizations to create tailored identity experiences for their customer base
Comparison API and features
| Feature | Entra ID Workforce | Entra External ID for Customers |
| Primary API | Microsoft Graph API Comprehensive directory management | Microsoft Graph API Subset focused on customer identity |
| User Management | Extensive control over internal entities | Management of external customer identities |
| Authentication Flows | Standard enterprise protocols | Highly customizable via APIs call during flow |
| Policy Management | Entra ID roles and application permissions | Entra ID roles and application permissions |
| Custom Identity Provider Integration | Yes via federation SAML, WS-Fed | SAML, OIDC, Social IdPs and Custom authentication extensions (REST) |
| Custom Login Page | Basic branding only | Full control (HTML/CSS/JS + templates) |
| Automation Capabilities | High for internal identity tasks | High for customer-facing scenarios |
| Granular Permissions Control | Yes | Yes |
Native Authentication
| Feature | Entra External ID for Customers | Entra ID Workforce |
| Authentication Flow | Native (in-app) authentication using SDKs | Redirect to browser or embedded browser for authentication |
| Identity Types Supported | Local identities (email/password, email OTP) | Federated identities (ADFS, Entra ID), password, passwordless, MFA |
| UI Customization | Full control of sign-in UI within the mobile app | Limited customization (branding via company branding settings) |
| SDK Availability | Available for Android (Kotlin, Java), iOS/macOS (Swift, Objective-C) | Uses MSAL SDKs or system browser for sign-in |
| Sign-in Experience | Seamless, app-native without redirecting to browser | Browser-based or embedded web view (browser-delegated) |
| SSO Support | Not supported with native auth | Fully supports single sign-on (SSO) across apps |
| Social or Enterprise IdP Support | Not currently supported in native auth | Fully supported via federation and social IdPs |
| Security Model | Shared responsibility with developer implementing native auth securely | Managed by Entra ID authentication pipeline |
- Native authentication in Entra External ID (Customer) provides a highly customizable, app-embedded experience, ideal for branded consumer apps. However, it currently lacks features like SSO and federation.
- Entra ID (Workforce) is optimized for internal enterprise scenarios, offering broad protocol support, federated identity integration, and SSO capabilities, but with less UI flexibility.
If your goal is to offer a fully embedded and controlled user experience in a consumer app, native auth with Entra External ID is ideal. If you’re supporting internal users with enterprise needs like SSO, federation, and broader identity provider support, the workforce tenant is the better fit.
Licensing Models
Entra ID Workforce
Entra ID Workforce licensing is typically based on a per-user subscription model Various tiers are available including a free tier with basic capabilities and paid tiers such as Microsoft 365 Enterprise Mobility + Security EMS and standalone Entra ID Premium P1 and P2 which unlock advanced functionalities like conditional access identity protection privileged identity management and advanced reporting The specific licensing requirements depend on the organization’s size security posture and the features required Organizations with Microsoft 365 subscriptions often have Entra ID Workforce capabilities included within their subscription costs providing a cost-effective solution for internal identity management
Entra External ID for Customers
Entra External ID for Customers employs a distinct licensing model primarily based on monthly active users MAU or authentication volume This model is designed to accommodate the often variable and potentially large scale of customer identities Organizations are typically billed based on the number of unique customers who authenticate within a given month or based on the number of authentication events if the authentication-based pricing model is selected This consumption-based approach can be more economical for organizations with a substantial number of infrequent users as costs are incurred only for active usage Different tiers and pricing structures may be available depending on the specific features and scale needed for the customer identity management solution Accurately estimating the expected monthly active users or authentication volume is crucial for determining the cost of utilizing Entra External ID for Customers
Comparison Table Licensing
| Feature | Entra ID Workforce | Entra External ID for Customers |
| Primary Metric | Per unique user | Monthly Active Users MAU or Authentication Volume |
| Free Tier | Yes Basic functionality | Limited free tier for development and testing |
| Paid Tiers | Entra ID Premium P1,P2 and Entra Suite | Various tiers based on MAU or authentication volume |
| Cost Characteristics | Predictable based on internal user count | Consumption-based scales with customer activity |
| Ideal For | Internal users employees partners | External users customers business partners |
| Advanced Feature Access | Yes in paid tiers Conditional Access Identity Protection etc | Yes in paid tiers MFA Custom Branding etc |
Conditional Access Features
Entra ID Workforce
Conditional Access in Entra ID Workforce is a critical feature enabling organizations to enforce access controls based on a variety of conditions such as user location device compliance application sensitivity and real-time risk assessments This allows for the implementation of zero-trust security principles and the protection of internal resources from unauthorized access
Current Conditional Access Features in Workforce:
- Location-based access control: Restrict access based on defined trusted IP address ranges or geographical locations.
- Device compliance enforcement: Ensure that devices accessing resources meet organizational security standards as managed by Microsoft Intune.
- Risk-based access policies: Leverage Entra ID Protection to assess sign-in and user risk levels and automatically enforce access controls.
- Application access restrictions: Control which applications users are authorized to access.
- Authentication strength requirements: Mandate specific levels of authentication such as multi-factor authentication or passwordless authentication methods.
Multi-Factor Authentication Methods in Workforce:
- Microsoft Authenticator application push notifications and one-time passcodes
- Phone call verification
- SMS-based verification
- Hardware security keys compliant with FIDO2 standards
- OATH Time-based One-time Password TOTP hardware tokens
Entra External ID for Customers
Conditional Access capabilities are also available for customer-facing applications within Entra External ID for Customers although the specific conditions and controls are tailored to the context of external user interactions Organizations can implement security measures such as requiring MFA for accessing sensitive account information or completing transactions blocking access from known malicious IP addresses and enforcing agreement to terms of use
Current Conditional Access Features in External ID:
- Location-based access control: Limit access based on IP address ranges or geographic regions.
- Risk-based access policies: Utilize the risk assessment capabilities to evaluate the risk associated with customer sign-in attempts.
- Authentication strength requirements: Enforce the use of multi-factor authentication for specific actions or user groups.
- Custom authentication challenges: Integrate with custom risk scoring engines to implement adaptive authentication challenges.
Multi-Factor Authentication Methods in External ID:
- Microsoft Authenticator application
- Email-based one-time passcodes
- Phone number verification via SMS or voice call
Comparison Table Conditional Access
| Feature | Entra ID Workforce | Entra External ID for Customers |
| Core Functionality | Contextual access control for internal resources | Contextual access control for customer applications |
| Location-Based Access | Yes IP ranges geo-fencing | Yes IP ranges geo-fencing |
| Device Compliance | Yes Integration with Microsoft Intune | Limited direct device compliance |
| Risk-Based Policies | Yes Entra ID Protection for users and sign-ins | Yes Risk assessment for sign-ins |
| MFA Methods | Authenticator app phone SMS hardware tokens FIDO2 OATH TOTP | Authenticator app email phone |
| Customization | High Policy-driven | High Policy-driven |
Enterprise Application Features
Entra ID Workforce
Enterprise applications within Entra ID Workforce provide a centralized platform for managing access to various applications utilized by internal users This includes SaaS applications custom-developed applications and on-premises web applications Access management features include single sign-on SSO capabilities and consistent enforcement of conditional access policies
Enterprise Application Features in Workforce:
- SAML-based Single Sign-On SSO: Integration with a wide array of applications supporting the Security Assertion Markup Language SAML protocol.
- OpenID Connect OIDC Support: Compatibility with modern authentication protocols for seamless user experiences.
- Password-based SSO: Secure access to legacy applications that do not support modern authentication protocols.
- Group-based access assignment: Efficiently manage application access for groups of users based on their roles or departments.
- Application Proxy: Securely publish on-premises web applications to external users without requiring VPN connectivity.
Entra External ID for Customers (Preview)
Enterprise Applications functionality is also available within Entra External ID for Customers but it is currently offered as a preview feature The objective is to provide a similar centralized management experience for customer-facing applications Enabling SSO for customers across various services after a single sign-in is a key aspect of this functionality Configuration of authentication methods and application of conditional access policies are anticipated features This capability aims to streamline the user experience for external users accessing an organization’s digital services
Comparison Table Enterprise Applications
| Feature | Entra ID Workforce | Entra External ID for Customers (Preview) |
| Primary Purpose | Manage internal application access | Manage external customer application access |
| Single Sign-On SSO | Yes SAML OIDC Password-based | Yes Expected SAML OIDC |
| Access Management | Group-based assignment | Likely similar mechanisms |
| Conditional Access Integration | Fully integrated | Integration in progress |
| Application Proxy | Yes for on-premises web apps | Not the primary focus currently |
| Current Availability | Generally Available | In Preview |
Limitations of Each Solution
Entra ID Workforce
While Entra ID Workforce is a comprehensive solution for internal identity management it may present certain limitations when addressing large-scale external customer identity scenarios The per-user licensing model can become cost-prohibitive for organizations with a vast number of customers Native support for social identity providers as primary authentication methods is less prominent and the configuration of highly customized customer registration and sign-in workflows can be more complex The focus on enterprise-grade features might introduce unnecessary complexity for simpler customer identity requirements
Entra External ID for Customers
Entra External ID for Customers while well-suited for managing customer identities has its own limitations The absence of direct built-in synchronization with on-premises AD DS can be a challenge for organizations with significant on-premises infrastructure dependencies While B2B collaboration is available it may not be the most suitable approach for all types of customer interactions The highly customizable nature of the Identity Experience Framework can also lead to increased complexity in policy management and deployment requiring specialized expertise The feature set is specifically designed for customer identity management and may lack some of the advanced enterprise-focused features found in Entra ID Workforce such as extensive device management capabilities
Comparison Table Limitations
| Feature | Entra ID Workforce | Entra External ID for Customers |
| Scalability for Customer Identities | Potentially costly due to per-user licensing | Designed for high scalability with consumption-based pricing |
| Social Identity Provider Integration | Less prominent native support | Strong native support for various providers |
| On-Premises Synchronization | Excellent via Entra ID Connect | No direct built-in support |
| Custom Authentication Flow Implementation | More complex for customer scenarios | Highly customizable via Identity Experience Framework |
| B2B Collaboration Use Case | Primary method for external collaboration | Available but not always ideal for all customer interactions |
| Enterprise Feature Breadth | Comprehensive suite of enterprise features | Focused feature set for customer identity management |
Conclusion Strategic Identity Management Choices
The decision between Entra ID Workforce and Entra External ID for Customers depends fundamentally on the primary user base you intend to manage and the nature of their engagement with your organization
Select Entra ID Workforce when:
- Your primary focus is managing employees internal partners and contractors.
- You require seamless integration with your on-premises Active Directory infrastructure.
- You need to implement comprehensive conditional access policies for internal resource protection.
- Your licensing requirements align with a per-user subscription model.
- You require extensive integration with other Microsoft 365 services and enterprise applications via the Microsoft Graph API.
Opt for Entra External ID for Customers when:
- Your primary objective is to manage the identities of your external customers or business partners interacting with your applications and services.
- You need to support diverse authentication methods including social identity providers and email/password.
- Scalability and cost-effectiveness for a large external user base are critical.
- You require highly customizable registration and sign-in experiences.
- Your primary goal is to provide a secure and user-friendly identity solution for your customer-facing applications.
For organizations with varied identity management requirements, a hybrid strategy combining Entra ID Workforce and Entra External ID for Customers is often optimal. A clear understanding of each solution’s technical distinctions and limitations is essential for building a secure, scalable, and efficient identity framework tailored to specific needs. Careful evaluation of these factors will enable organizations to make informed decisions that best support their strategic goals.
