Souness, who won 54 caps for his country, said the current squad is not up to the standard of his day.
"Going back to my generation we had players in all the big teams in England and winning trophies in England," Souness told BBC Sportsound.
"We now have a group that's maybe short of that level."
Scotland lost both games in their Euro 2016 qualifying September double header to Georgia and world champions Germany, which leaves them sitting in fourth place Group D.
"I think the manager deserves great credit for what he's doing with a limited group of players," said Souness.
"I don't want to be harsh on the players because I know when you're a Scotland player you go out and give it your lot.
"The manager deserves great credit for gelling them and getting the very most from a group that are limited. That's all you can do as a manager.
"He's got what he's got and he's doing a very good job of it as far as I'm concerned."
Scotland's final two qualifiers next month see them host Poland at Hampden before travelling to face Gibraltar.
The best they can place in the group now is third place which would secure a spot in a two-legged play-off.
However, it is not entirely in their own hands, with a number of permutations needed in other games in the group involving Germany, Poland and the Republic of Ireland.
Souness admitted: "It's never great if you're relying on other people."

The European Banking Authority (EBA) and European Medicines Agency (EMA), based in Canary Wharf in London, employ just over 1,000 staff between them.
The banking and medicines agencies are seen as the first spoils of Brexit by the 27 remaining members of the EU.
About 20 countries are expected to enter the bidding process.
There will be fierce competition to attract the agencies' highly skilled employees, their families and the business that comes with them.
This includes about 40,000 hotel stays for visitors each year.
Countries have printed glossy brochures, posted promotional videos online and hired lobbying firms.
Frankfurt - location of the European Central Bank and a major financial centre - is seen as favourite to get the EBA. But Paris is also keen to win that contest.
And the Irish government is marketing Dublin as a location, with a brochure that highlights the city's business culture as well as "beaches and mountains on its doorstep".
The contest has pitched larger countries against smaller ones from across the EU.
Each country can bid to host one or both agencies. But it can only make one bid per agency.
The European Commission will assess the entries based on the quality of office space, job opportunities for spouses, good "European-oriented" schooling and transport links.
Accessibility and efficient infrastructure are the top two agreed criteria.
Amid the rivalry to host the EMA, the Netherlands, Ireland and Denmark have hosted events in Brussels to promote their bids, the Politico news website reports. The number of states vying for the EMA is reckoned to be 21.
The 27 remaining EU countries are determined that the UK will pay the relocation bill, as Brexit was a UK decision.
EMA
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EBA
European ministers will use a complicated voting system to choose the winners in November. EU leaders agreed on the procedure in June, and some observers have already likened it to the Eurovision Song Contest.
Before that vote, the European Commission will assess the competing bids and make its recommendations.
In November each of the EU foreign ministers will vote in order of preference - three points for the preferred bid, two points for the second-favourite and one point for the third.
If no single country obtains 14 first-preference votes the voting will go to a second round. Each country in that round will have just one vote to cast - for its favourite.
The EU is keen to locate more of its agencies in the newer member states of Central and Eastern Europe.
Gordon Strachan is doing as best as he can with the talent at his disposal, according to former Scotland captain Graeme Souness.
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EU countries have until midnight to submit bids to provide a new home for two agencies that will be relocated from the UK after Brexit.