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This has come up a few times in different engagements in the past, and I decided it would be worth publishing some guidance around how to set this up.
Why would I want to hide users?
Perhaps you have members of the organisation that you don’t want contacted by everybody else. Say if you have a strict communications policy that the CEO shouldn’t be directly contactable, you could hide them from appearing in the address book.
Another example is if you have resource accounts setup that are enabled for Lync whose purposes is for only making calls, there’s no need for these to be discoverable in the address book. Or perhaps you don’t want them searchable because they are private numbers or are in private areas, you would hide these from the Lync Address Book.
More information available here.