Your Azure AD tenant contains Azure AD Premium P2 licenses. A partner company owns fabrikam.com and has a user User1 with the email user1@fabrikam.com. You must grant User1 access to resources in your tenant so that User1 can sign in with user1@fabrikam.com credentials, you can assign access to resources, and administrative effort is minimized. What should you do?

Creating an invite for User1 is the correct approach. This leverages Azure AD B2B collaboration, allowing User1 from fabrikam.com to access your tenant's resources using their existing credentials. This minimizes administrative effort as you don't manage their identity. Creating a user account for User1 would require you to manage their credentials, which is inefficient for external users. Adding fabrikam.com as a custom domain would imply you own and manage that domain, which is incorrect for a partner company. Enabling guest self-service sign-up is for allowing guests to sign up for applications themselves, not for directly inviting a specific external user with existing credentials to access resources.