Changes to applications’ backup and restore behavior on iOS/iPadOS and macOS devices

jatom9 

If I understand your request correctly, you are referring to the Outlook contact sync feature. It is possible to turn off the "sync" of contacts from Outlook to native contacts. In fact, this is not a true sync, but rather an export (contacts are stored under the user's local/iCloud address book). So all the native iOS settings which apply for your offline/iCloud contacts also apply for the Outlook-synced contacts. To turn it off, you can utilize a managed app configuration for Outlook on iOS.

To learn more:

https://learn.microsoft.com/en-us/exchange/clients-and-mobile-in-exchange-online/outlook-for-ios-and-android/outlook-for-ios-and-android-configuration-with-microsoft-intune#general-app-configuration-scenarios 

If you require business contacts availability in native contacts, (e.g. for bluetooth-car-integration), you can still deploy a native exchange profile which is limited to contacts sync and cannot be changed by the user. Then you profit from all the native iOS managed open-in mechanisms and control these contacts via iOS restrictions. (e.g. no access by privately-installed apps, like Whatsapp). iOS backup for contacts which synced from a managed Exchange profile, is blocked by default.

Hence, the origin of your issue is not really related to this topic here, but belongs to iOS and Outlook contact handling.