Hi @deesha boodhun ,
I understand you want a People Picker resolve the Office 365 AD users instead of the users just inside a SharePoint list.
Then I suggest you can use the "PnP People Picker" instead of Office UI Fabric People Picker as this People Picker supported to get Office 365 AD users directly once set up context, no need to use API get data and bind to People Picker, please check the link below for details:
And here is a complete code demo about using the PnP People Picker inside React SPFX:
PnP People Picker in the SharePoint Framework(SPFx) webpart
Thanks
Best Regards
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