Imagine if phone calls only worked between people on the same carrier. AT&T to AT&T? Fine. But try calling someone on Verizon? No signal.
That’s what cross-company communication in Microsoft Teams used to feel like. Even though most businesses use Teams, chatting across organizations often meant switching accounts, managing guest access, or giving up entirely.
In this article below, we’ll break down how it works, why it matters, and how TeamMate makes it enterprise-ready.
What is Federated Chat?
In plain English, federated chat is a secure way to chat with people outside your organization in Microsoft Teams without sending 43 invites, switching tenants, or making a phone call.
Here’s how it works: Every company using Microsoft 365 has its own Teams setup, known as a “tenant.” Think of it as each business having its own private, self-contained version of Teams. By default, those tenants can’t talk to each other.
But with federated chat, they can.
So, if your team needs to message a vendor, partner, or client who also uses Teams, federated chat (or federation) makes it possible. You stay in your environment, they stay in theirs, and communication just works. Simple as that.
Guest Access vs. Federated Chat: Know the Difference
Guest access and federated chat are not the same thing. Mistaking one for the other can seriously derail your collaboration strategy, especially when working with external vendors, clients, or partners.
But before we talk about that, let’s learn about the differences and limitations.
| Feature | Guest Access | Federated Chat |
|---|---|---|
| Access Method | External users are added to your Teams tenant as guests | External users remain in their own tenant |
| Account Switching Required? | ✅ Yes; users must manually switch between tenants | ❌ No; users stay in their own Teams environment |
| Admin Visibility and Control | Limited visibility; guests blend into internal channels | Full visibility with centralized controls (especially with TeamMate) |
| Security Risk | Higher; external users are “inside the walls” of your tenant | Lower; no tenant access granted |
| Setup Complexity | Often involves approval workflows, licenses, and careful access management | Lightweight; no special provisioning needed |
| Best For | Deep collaboration (e.g., internal contractors, joint projects) | Ongoing messaging with clients, vendors, suppliers, or partners |
When to Use What
Guest Access is like giving someone a temporary keycard to your office. You’re letting them have nearly unlimited access to channels, files, and more. It’s perfect when you’re:
- Onboarding a contractor who needs access to a specific Teams channel for a few weeks
- Collaborating with a freelance designer who’s working closely with your internal marketing team discussing image ideas
- Running a joint project with a partner who needs access to shared documents, video calls, and group chats
You’re basically saying, “Come in, grab a desk, make yourself at home, but don’t forget to check out when the job’s done.”
Federated Chat, on the other hand, is more like having a secure intercom at the gate. You’re able to focus on chatting clearly, consistently, and securely, without inviting them into your internal setup.
Use it when you need to:
- Stay in regular contact with a vendor who’s not part of your organization but critical to your operations
- Coordinate with outside legal counsel without handing them access to your internal systems
- Support multiple clients as an MSP, each in their own Teams environment; no switching, no mess
It’s a great way to maintain professional distance with productive proximity.
TL;DR: Most modern B2B communication needs don’t require full guest access. Federated chat keeps things cleaner, safer, and easier to manage, especially when paired with TeamMate.
The Built-In Federated Chat in Teams: Helpful, But Not the Whole Picture
Microsoft Teams has supported basic federated chat for years. As long as both sides have that functionality enabled:
- You can send and receive 1:1 or group messages with external users.
- Each organization keeps complete control over their own Teams settings and policies.
- There’s no need to create shared Teams or use guest access.
- Users have access to standard features like file sharing, reactions, etc.
This setup is great for simple interactions with people outside your company. You can get messages across, avoid email, and stay inside the Teams experience. Win-win.
But once you start relying on it for more regular, high-volume, or business-critical communication…
The cracks start to show:
- Presence detection between tenants is hit-or-miss (users may appear offline when they’re not).
- There’s no centralized way for IT to view or manage all external chats across the organization.
- Compliance and retention policies don’t automatically cover external conversations.
- Admins have limited control over members who can join a chat with which external domains.
- Search, auditing, and monitoring tools don’t extend cleanly to federated threads.
In short, Microsoft provides the foundation. But it’s missing the management tools and oversight features that many businesses (especially in regulated industries) actually need.
That’s where a solution like TeamMate’s Teams Chat Connector adds real value: by filling in those gaps and giving IT teams the control and visibility they’ve been missing.
Federated Chat Is Good, But TeamMate Makes It Great
Microsoft Teams gives you the basics for cross-tenant communication. But TeamMate’s Teams Chat Connector turns that out-of-the-box capability into a fully managed, secure, and scalable solution. With us, you’ll get:
- One unified hub for all inter-organizational communication, which is searchable, trackable, and easy to manage
- Compliance built in with policy-based controls, audit logging, and Microsoft 365 security alignment
- No tenant-switching or extra logins, even when managing dozens of clients or partners
- Plug-and-play setup that sits right on top of your existing Teams environment
With TeamMate’s Teams Chat Connector, you get the freedom to join conversations across organizations without giving up visibility, structure, or sanity.
Want to see Teams Chat Connector in action? You can get a free trial of it here →
Who Benefits from Federated Chat with TeamMate?
Now that we’ve discussed what federated chat is (and how TeamMate levels it up), it’s time to define how this plays out in the real world, for real businesses.
First, Legal Firms
Law firms work with outside counsel all the time. But thanks to strict confidentiality rules and insane email volumes, communication is slow and risky. Federated chat lets them securely message external legal teams while keeping a full log for compliance.
Second, Healthcare
Hospitals and clinics coordinating with third-party labs or specialists? They need instant communication, but also airtight security. With federated chat + TeamMate, they can chat securely across entire organizations without risking HIPAA compliance violations.
Third, Finance
Financial institutions are famously paranoid. And for good reason. With TeamMate’s enhanced federated chat, they get fast messaging that’s also logged, secure, and auditable. Clients and external advisors have the details to stay in the loop without opening security holes.
Check out how our Teams Chat Connector boost employee productivity too →
And that’s not all…
Dozens of other industries can gain quite a bit from federated chat. But none more so than managed service providers.
Why MSPs Should Be Selling Federated Chat Right Now
If you’re an MSP or IT provider and you’re not offering federated chat options for Microsoft Teams, you’re leaving money (and a lot of goodwill) on the table. Here’s the deal:
- It solves a problem your clients already have. Most businesses are tangled up with outside vendors, contractors, and clients using Teams. Federated chat + TeamMate lets them meet and connect with those people quickly and easily.
- It makes you look like a hero. Instead of just putting out fires, you’re giving clients a smoother, smarter way to collaborate. You’re solving a daily frustration they may not even know can be fixed.
- It’s a natural extension of your M365 services. You already manage their Microsoft 365 environment. This just builds on what you’re doing, with bonus points for helping them stay secure and compliant.
- It brings in recurring revenue. Package it with your Teams setup, bundle it with your support plan, or offer it as a premium feature. It’s flexible, and it pays off.
- It’s incredibly sticky. Once your clients experience seamless inter-organizational communication, without exposing data or opening compliance loopholes, they won’t turn back.
In essence, federated chat through TeamMate makes you more valuable, builds stronger client loyalty, and adds another layer to your services that’s both easy to deploy and hard to live without.
So, Ready to Tear Down the Tenant Wall?
TeamMate is here to help you do it. Whether you’re an MSP or an SMB, we can help design a solution that lets you communicate quickly and easily across Microsoft Teams.
One that you can manage, scale, and rely on.
All you have to do is schedule your free trial today.While you’re doing that, we’ll be readying our virtual sledgehammers.
