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What is the difference between inviting an external user (to our company) into a JIRA project using the "Project Setting" within the project vs inviting them using the "User Management" in the Atlassian Administration?
The difference between inviting an external user (to your company) versus inviting them using the "User Management" option is the level of access they'll get.
When you invite an external user to a project using project settings, you give them access to a specific project, and you can also control what role you give them. (Keep in mind project roles aren't editable on the free plan.
The User Admin is more about product access for team members inside your organization.
I hope this is helpful,
P.S. If you need to give Jira access to people outside of your organization, consider visiting the Atlassian marketplace.
Visor is one option that lets you import your Jira data and then control what you want to share: https://marketplace.atlassian.com/apps/1226209/visor-spreadsheet-gantt-chart-for-jira-with-excel-export?hosting=cloud&tab=overview