And Ballack - who played for both Bayern Munich and Chelsea during his career - says his talent is beyond question and urged him to realise his undoubted potential.
"We're talking about a player who just came recently from the youth level. He's trying to achieve the step to the professional level in a top club," he said.
"This makes it a lot more difficult for a young player because the standard is very, very high.
“It's hard to say whether the player is good enough for this demand or not. It's a fact that he's an outstanding talent.
"Chelsea have to evaluate whether they want to keep him or maybe send him on loan.
"I think that's the philosophy of all top teams - to educate young, top players and to give them the possibility to play.
Callum Hudson-Odoi has been the subject of four bids from Bayern Munich (Image: GETTY)
He is said to be keen to move after struggling to force his way in to Maurizio Sarri's Chelsea team (Image: GETTY)
"It's the most important thing during that young age, to play without losing the player.
"Bayern had their focus on Hudson-Odoi very early. We will see if the transfer is happening or not."
Hudson-Odoi is said to be keen to leave after struggling to force his way into Blues boss Maurizio Sarri’s first team on a regular basis.
He has played 10 times this season but is yet to start a Premier League game for the club.
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Former Chelsea and Bayern star Michael Ballack hailed Hudson-Odoi as an outstanding talent (Image: GETTY)
Ballack proved himself to be one of Europe’s best midfielder when he left Bayer Leverkusen to make the leap to Bayern in 2002.
But the German said he was not in a position to advise him on what to do despite his own experiences.
"I don't have any advice for him. He has to see if he has a realistic chance at Chelsea in the first team or not," he added.
"[Recently] he was often part of it and showed his qualities. Is it the right time to go to another top club like Bayern?
"Every player has to decide this on his own. There's no special recipe."