Just a developer (for Excel). I don't work on Minecraft or anything related but I'm happy to (try and) escalate this internally in Minecraft and/or identity through the internal channels. You can email me at bgruenbaum@microsoft.com
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.
The community has been complaining about this for months, if they don't know that this is a ubiquitous issue, they have their head in the sand.
I'm not OP, but I think I can speak for them when I say that you're a life saver! I too faced this issue a week ago, but for sake of convenience I just gave my number to them. Seriously, thank you.