We are actively working on this item. You can read more about it here: https://techcommunity.microsoft.com/t5/outlook-blog/get-organized-people/ba-p/1636628.
122 votes23 comments · Outlook for Windows (Desktop application) » People · Flag idea as inappropriate… · Admin →
An error occurred while saving the commentColby Morgan commented
I'm also experiencing this. We are trying to switch users over to the Outlook app to resolve calendar issues, but the lack of contact sub-folders syncing is an absolute deal breaker. This seems like an obvious feature that should be available.