Deep Crawl shows an issue of high external linking (68) for my website.
I thought external linking is good for the website! Is this an issue that needs to be fixed to improve SEO, and if so, what is the solution?
When a webpage has too many external links on it, it's possible that it can get hit for looking like a link farm.
Years ago, many websites began ranking on Google by getting their sites listed on hundreds of directory websites. Google put a stop to this by classifying them as link farms and directory sites.
If your webpages have too many external links, it begins to look like it's not a page that's useful to users from a robot's perspective. And it risks appearing like you're trying to game the system by ranking other websites, even if that's not your intention.
Directory websites have taken a pretty big hit on Google's search algorithm, and so it's wise to reduce your outbound links on pages to a more reasonable number.
When Google gives you manual actions (in this case of notifying you of too many external links), you should try to take notice. Even if the manual action doesn't seem fair, it's best to try and cooperate with the robot so that you can best suit its algorithm.
In terms of external links, if all of those are passing link juice then your page authority could be substantially diminished. It's true that linking out to trustworthy websites can actually increase your SEO. But too many outbound links and you're devaluing your own inbound backlink profile.
Most of the time when websites begin deranking on Google, those webmasters receive no notifications of why their site is losing traffic. Constructive criticism can be a blessing in disguise as at least the bot is giving you advice on how to rank your site better.