There has always been debate about the maximum number of outbound links you should use on any given page. As recently Google guidelines stated, “Keep the links on a given page to a reasonable number (fewer than 100.)”
This number came from the early days of search when bandwidth limitations forced crawlers to cap the amount of data they could process for any given page.
According to Dr. Pete in his blog about outbound links for SEO, “How Many Links Is Too Many,” the 100-link limit was always a suggestion, never a penalty situation. Google wouldn’t remove a page if it went over the limit. It might just prevent all of the links beyond the 100th from passing PageRank.
However Google engineer John Mu essentially removed the 100-link limit, stating if a page is “sufficiently authoritative, Google is going to be interested in the pages that are being recommended by that page.”
If Google doesn’t really care how many outbound links you use, does it matter? Yes, it does, because it effects the distribution of your PageRank.
Every page has a PageRank, which represents how important Google thinks the page is. This rank gets divided between every link on that page. The PageRank formula gets very complicated, but the simplest way to look at it is this: the more links you have, the less PageRank for each link.
If you have one homepage and three 2nd-tier pages linked from it, those three pages will receive approximately 28% of the PR from the homepage. However, if there are 150 2nd tier pages, each page will only receive approximately 0.6% of the PR. This is a very basic example, but it shows how quickly the PR can become diluted.
So, what’s the right number of outbound links? There isn’t really a right number. You need to strike a balance that’s right for your firm.
You don’t want a site structure that’s too deep, but you don’t want it to be too flat either. In the end, while the initial reasoning for the 100 link building guideline is gone, it’s probably still smart to use no more than 100 outbound links for SEO.