Hi, Sai. I also have this challenge, and have confirmed that it continues to occur. If there is only an external contact associated to the email timeline entry, when entering the company, it deletes the external contact.

Hi @sai_ram I am also still seeing this as an issues. I can also see that is it not possible to add the external contact manually on the timeline. 

@sai_ram This is an issue in our instance. Did you respond to the people that posted 8 and 9 months ago? If so, what was the resolution? It would be nice to share it here for others who search the same question.

Posting for others who may come across this question.

This is the reply I received from Gainsight Support:

It is an expected behavior, that the External Attendees will be cleared out when the Company/Relationship is changed. The reason is that under the current system, we can only include External Attendees who are affiliated with a Company/Relationship selected either within the Primary Context or with the Company/Relationship associated with the specific activity.

After asking follow up questions, received:

There is a functional change that happened recently. 
From the Support end, we do sincerely understand the concern about this change. As we have confirmed this is the expected behavior with the current system implementation, we have worked with Product and created the Enhancement Request from our end, so that your CSM will be able to continue tracking this in the longer term.