Hi @Ramki ,
In my understanding, Presence sharing with everyone (including Federated services) is always enabled for users in Teams. When your Teams integrated with outlook, Your Teams client will tell outlook what your status is, and outlook will ask your local copy of Teams what your status is and put it next to your name.
More discussion here for your reference:
https://www.reddit.com/r/MicrosoftTeams/comments/altz97/teams_status_in_outlook/
If the response is helpful, please click "Accept Answer" and upvote it.
Note: Please follow the steps in our documentation to enable e-mail notifications if you want to receive the related email notification for this thread.