How come web design copnaies Dont get penlized 4 "A LOT OF" reciprocal link exchange

It is fact that now days Search Engines do not like reciprocal link exchange. (or you link to me, I link to you process). It is a spamming, black hat SEO. But what about when website design companies do it in their portfolio page? I see a lot of web design companies put the websites they have built in their “portfolio page” and they put their link at the bottom of the client’s websites they have built. Isn’t that considered as reciprocal link exchange? Some web design companies have more then 500 websites built in their portfolio page and each have reciprocal link. There are some well known and quality web companies doing that and how come search engines do not penalize this kind of link exchange? Do they know the reason of the link exchange and consider it ok if It is done for portfolio and branding purpose?

I still believe it doesnt hurt to have few links exchanged but strictly with websites that are similar to your niche , thematic link exchange as they call it.
may be 10-15 links ,should be good.

Yes but most of the web design companies do not do thematic link exchange. they build all kinds of different websites for all kinds of different businesses and most of them are not relevant to web design or any kind of design so they get not relevant, not thematic links.

How do you know that they have not been “penalized”? Google could have easily taken away any benefit they receive from the “link exchange” and they still rank well for other legitimate reasons?

I know that because i did research. Some sites rank 6, 7. and they are in the first page of google for most of their keywrods.

You don’t know that!!! Google could have easily taken away all the ‘link juice’ value that they get from the “link exchanges” and they still rank well for other legitimate reasons.

cbp: I see. that makes sense

I would put good money on betting that Google is smart enough to figure out the difference between “you scratch my back, I’ll scratch yours” links and links between designer and portfolio. For a start, each website can only have one “designed by…” link (even though the designer may have loads of links), whereas link exchanger spammers are likely to have dozens, if not hundreds, of reciprocal links from each and every site.

You can not treat as link exchange, Link exchange is something which is done for mutual passing link juice and credit to each other. Have you seen any where where they get backlink from main body of websites…No. The place of getting credit from footer from page.
Coming to next part of your question: The ideal way to show portfolio is to show snapshot of different pages of client and giving details that what was the challenge, at most of the times a comparison like Before and After
While penalizing any site for black hat techniques, Google takes care of all circumstances, situations and when it is found that guidelines has been neglected, site is involved in black hat techniques for getting rank then penalization is taken place.

No, it’s called natural behavior (or that’s the term I just thought of now). The web is all about links, you see—links that mean something to the site owners. It’s meaningful, useful and appropriate for a web designer to link to work that’s been done, and it’s fair enough (though some people don’t like the practice) to put a link on the client’s site to the web designer. This is all natural human behavior.

Google is not out to punish normal human behavior, but to slap down those who are trying to game the system for their own advantage. There is a big difference between those two things. The danger of thinking too hard about SEO is that you forget about the real world.