Hello Smriti, Smriti,
The service principal you see in the ARM template is the default service principal used by the workspace provider. This is a managed identity that performs operations on behalf of the workspace.
The service principal is used to grant access to the workspace provider to the Azure resources that are required for the workspace. The service principal has the same object ID and owner role for all the workspaces in your subscription, but it may differ across different tenants or subscriptions.
You can use a custom service principal instead of the default one if you want to have more control over the permissions and roles of the workspace provider.
Using the properties, you can specify a custom service principal in your bicep template authorizations configuration
fo that, you will need to create an Azure service principal in your Azure account first. Please see the below document.