Dear @Ross, Sharon,
Thank you so much for the additional information, your update is extremely helpful, especially the detail that you can create a Contact List in Outlook Desktop, but not in Outlook Web, and that other colleagues are experiencing the same behavior. This tells us something very important about where the issue is (and where it is not).
From what you described, the contacts themselves are not lost. They still appear in Outlook Desktop and even in Teams meeting invite suggestions, but they do not appear or sync in Outlook on the Web, and the “New contact list” button is greyed out.
Because everything still works in Outlook Desktop and the data is intact, this points to a service‑side issue with the web contacts experience, not data loss.
If multiple people in your organization are affected and the change happened “overnight” as you mentioned, this further confirms that something has changed in the service not in your device or your apps.
At this stage, the next meaningful step is for your administrator to open a support ticket with Microsoft, so the backend service team can check your tenant directly. Issues with Contacts/OWA People typically require a backend review, and Microsoft Support can see whether your tenant is in the middle of a migration, experiencing a partial service degradation, or needs a repair.
Your admin can raise support ticket from Microsoft 365 Admin Center>Support>Help & Support.
For reference: Get support | Microsoft Docs
I truly hope this explanation helps you better understand what’s happening and gives you a clear direction toward resolving it. If my response has helped you better understand the situation and guided you toward a possible next step, please consider marking it as the “Accepted Answer.”
Doing so will pin the thread to the top, making it easier for others who face the same issue to find your question and benefit from your pioneering effort in raising it. It also helps other users searching with related keywords discover the discussion more quickly.
Thanks again for bringing such a thoughtful and well‑documented question to the community. Please feel free to share any new updates, I’m here and happy to help.