After further research I realised that I was only synching with one Outlook folder (can't remember which one but it was not the recipient cache) in my Outlook account. When I select the iPhone in iTunes and click on Info, no Outlook folders are visible in "Synch Contacts with Outlook" option.
I identified it by doing a search in Outlook client for one of the contacts that was being transferred to the iPhone Contacts list using the "Search Contacts (Ctrl+E)" field on the Home tab in People and selecting "All Outlook items" as the search area. The folder where this contact sits is not visible in the Outlook client.
As the folder is not visible in Outlook client, I had to delete it in OWA (Outlook Web Access). I think I went to People in OWA and clicked on the folders displayed on the left hand window.
That allowed the iPhone Contacts to synch with Outlook People list using "All Contacts" but synch now includes all e-mail addresses from the Outlook email cache ➖which is very frustrating!!!! However in iTunes, the Synch Contacts now displays folders including Recipient Cache.
Tried to eliminate the e-mail address only contacts by selecting folders apart from Recipient Cache when synch using iTunes. When I did this, it only synched included "Skype for Business Contacts" folder even though all other folders were selected. There must be a hidden folder in Outlook or iTunes has an integration issue with Outlook 2013. I proved this by just synching with "Recipient Cache" and this was 210 e-mail addresses but no telephone numbers.
In addition, I disconnected my PC from the internet and tried synch again, deselecting Recipient Cache and this did not improve the situation.
So, part fixed but this has introduced an additional issues, i.e. I have 210 contacts I do not want. I have yet to test how this integrates with my car when I want to use the BT in the car for mobile phone - it should download all contacts to the car so I do not have to call direct from the phone. In my previous car the download was limited to 200 contacts so dropped anything over that limit!!!!