The current design limitation in LCS regarding the visibility of disabled or deleted accounts at the organization level.

While I understand that these accounts remain visible “by design” and that it is not currently possible to remove them through the LCS interface, I would still like to highlight a few practical and governance-related concerns that arise from this behavior:

1. Relevance of Retained Accounts: If a user account has already been disabled or removed from both Microsoft Entra ID and all associated LCS projects, its continued visibility at the organization level does not appear to serve any operational purpose. Instead, it can lead to confusion during periodic audits or user reviews, as inactive and nonexistent users are still listed.
2. License Management and Compliance: From a governance and license optimization perspective, it becomes challenging to reconcile the actual license usage and determine whether these “retained” users have any indirect linkage to license consumption. Could you please confirm whether such inactive users, although visible at the organization level, have zero impact on LCS licensing and do not consume any entitlements? A clear confirmation on this will help us better manage internal reporting and compliance with licensing audits.
3. Directory Hygiene and Administrative Overhead: While it has been mentioned that this is only a directory hygiene issue, it still creates unnecessary administrative overhead—especially for organizations managing multiple tenants and environments. Having an option to clean up or archive these stale user entries (similar to Entra ID’s deprovisioning mechanism) would significantly improve accuracy and clarity.