City lost to Tottenham on Sunday as they battle to finish in the automatic Champions League qualifying places.
“You can trace this back to August and the Vincent Kompany situation," Souness told Sky Sports.
"Did they know that was coming? They didn't know their best central defensive partnership and they went and bought another full back in Joao Cancelo.
"That's come back to haunt them as they've taken their mainstay out of the midfield Fernandinho, your best holding midfield player. That weakened the midfield and has caused a major issue."