The point to be made to your colleagues is that requiring people to provide a phone number in order to unlock a Microsoft account is driving those people away from other Microsoft products, such as Excel. So effectively, the poor account management practices at Microsoft are putting your job at risk.
Yeah, allowing someone to enter an arbitrary phone number is actually worse security than sending the confirmation code to the email address associated with the account.
And Microsoft could send the confirmation code to the email address already associated with the account, but they would rather create a reason to siphon more data from people.