Before proceeding to this topic, I would like to talk about the necessity of adding a custom domain to your Cloud ( Azure in this scenario )

By default, you have all the flexibility to choose your domain when you have On-Premise infrastructure. You install Active directory domain services, bring up a domain controller and choose a domain as per your convenience. So, all the identities which are created in that domain will carry the same domain name.

In Cloud, you will be asked to give the domain name during the registration process of Azure. For example, if you give ABC as your domain, if you create a new user as user1 in cloud, he has the extension of user1@ABC.onmicrosoft.com. Similarly User2@ABC.onmicrosoft.com and so on. It will be difficult for the organisation to have the identities as such. Instead, they can add their domain to Azure so that they can have User1@customdomain.com.  In this demo, I use a custom domain  kartikkopalle.com and a new user who is created will have the extension of user1@kartikkopalle.com

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Prerequisites: 

• A registered domain name
• Access to O365 Portal. you can get a free Azure account from here

For this demonstration, I am using my custom domain kartikkopalle.com

Login to O365 Portal at https://login.microsoftonline.com

Navigate to Domains and click on Add Domain

You will be directed to the below page. Get started

Give your domain name

Adding DNS records:

You will be shown with a TXT value. You have to go to the website, where you registered your domain and enter these values

Step by step procedure to add a TXT value : https://g.microsoftonline.com/0BX20en/949

After giving the TXT records, go back to O365 portal, select the domain and start the setup process.

Now, all the users will be prompted for an update to the new domain

Now you can see that the user kartik us updated from kartik@ML21.onmicrosoft.com   to kartik@kartikkopalle.com

Sign out and sign in with the new username

Now, when you create a new user in O365 portal, you will have an option to select the custom domain