While I am migrating users from JIRA service desk portal customer to Atlassian account to enable SSO for customer, We are getting error as "we cannot migrate the user as there are insufficient licenses"
When a customer is converted to an Atlassian account, by default they are given Site access, which consumes a license. You can manually remote their site access via user management, and they will still be able to be a customer.
If you are at your user limit this is an unfortunate limitation that currently exists, and is something that we are looking to address in the near future.
As a workaround you could temporarily disable another user while you make the switch, or increase your license limit.
I hope this helps,
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