Hi @pankaj Exchange ,
The Corp.com is an AD that is synchronized with the tenant xyz.com and does not have an Exchange server installed. You want to migrate users in corp.local to corp.com and synchronize with mailboxes in Office 365. If I understand wrong, please correct me in time.
According to my research, your action plan is feasible. First, you need to remove the mailboxes in corp.local from the hybrid deployment, just as you did in the first step. Make these mailboxes only exist in the cloud. After that, you could create user accounts in corp.com and synchronize these mailboxes with the on-premises AD through SMTP matching.
But it should be noted that the users in your corp.local have been synchronized with the mailboxes in office 365. If you create a new account in on-premises, the GUID of the local account may not match the immutable ID value in your Azure account, causing the synchronization to fail. At this time you need to perform Hard Match using the GUID / immutable ID. And you will still need to ensure that the UPN suffixes match the primary email domain on-premises and in the cloud.
About synchronize the on-premises user account with the Office 365 user account, you could refer to: How to use SMTP matching to match on-premises user accounts to Office 365 user accounts for directory synchronization
About the “ImmutableID Hard Match in Azure AD Connect” and how to convert, you could refer to: Soft (SMTP) vs. Hard (immutableID) matching with Azure AD Connect and ImmutableID Hard Match in Azure AD Connect
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