Hutton, a former Rangers, Scotland and Premier League defender with Tottenham and Aston Villa, told Football Insider that things haven't gone as expected for the "obviously talented" Arzani.
“What you can say is you come with aspirations of doing unbelievably well – you’re going to attack it, you’re going to do it – and sometimes it just doesn’t work out.
“It could be you’re just not fitting into the different culture, finding it tough being away from home – there’s so many different reasons behind it but the thing I will give him is he’s very young.
“He’s obviously a talented player otherwise Celtic wouldn’t have wanted him in the first place. Something’s just not quite clicked.
"He’s got time on his hands so yes, it’s not ideal, but he’s still got time to prove himself.
Hutton urged the 21-year-old Australia international to stay at Celtic and fight to prove his worth.
“Use this as a positive – go and prove Celtic wrong, that they made a mistake," he said.
"Go and use that to fuel that fire to go and prove everyone wrong and prove what you’re capable of.
Arzani seems headed for the Celtic exit, with his next destination unknown - although the Socceroo mentioned the Netherlands to The World Game last week.
“Holland comes up because it’s a selling league and they develop a lot of really good talent there,” Arzani said.
“Celtic’s been tough, there are a lot of good people there and it’s a good club, but the most important thing for me is game time and I wasn’t getting that.
“I was getting frustrated with injuries and things like that and the most important thing now is to look forward and go somewhere I think I’ll get game time.”
“The (ultimate) aim is to stay in Europe and give it a proper shot.
“I don’t think I gave myself a fair chance this time around because I wasn’t fit the whole time.”
