First of all, the capability to invite external users is disabled by default and has to be enabled on the tenant level. In the SharePoint Online administration center, click Manage site collections and then click Settings / Manage External Users to switch the setting to Allow.
After allowing external users at the tenant level, you need to enable a feature on the site collection. In the site collection features, enable the External users invitations feature.
External users can now be invited to a SharePoint site by selecting Share Site from the Site Actions dropdown in the top left.
When a SharePoint user invites an external user, only the e-mail address of the external user needs to be supplied. This can be any e-mail address, including standard corporate e-mail addresses. The external user will get an invitation e-mail with a button to accept the invitation. That button leads to a logon page that allows the external user to logon using one of two methods:
It is important to understand that the external user does not need to create a new ID that matches the e-mail address that the invitation was sent to. If I send an invite to email@example.com he can logon with firstname.lastname@example.org. If the external user does not have a Windows Live ID or an Online Services ID, he can create a Windows Live ID and use that to accept the invitation that was received in the e-mail.
It should be noted that the external user only ends up in the permissions of the site after the user accepts the invitation and successfully logs on. In SharePoint People and Groups, you will see the external users with the e-mail addresses they used to logon, not the e-mail addresses you used in the invitation. However, if you hover over the user the e-mail address you sent the invitation to will be shown. From the People and Groups section, you can further adjust the rights of the user or revoke the rights if needed.
The ability to add external users to a SharePoint Online site is an easy to use feature of SharePoint Online that makes it simple to collaborate on documents and other SharePoint site content with business partners and customers and can be seen as a real selling point and advantage over SharePoint on-premises in many scenarios.
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