Wales were competitive in the second Test against the Springboks in Pretoria after a poor performance in the first Test in Bloemfontein.
But despite some encouraging signs Gatland believes there is not enough strength in depth within the Welsh game, and because he was without the likes of injured players like Martyn Williams, Dwayne Peel, Mike Phillips and Gavin Henson Wales had to rely on fringe players.
"I was pretty proud of what we achieved considering eight of the 22 are not regular starters for their region," Gatland said.
"That's a pretty hard prospect as a coach to go out there with key injured players and then fill the positions with players who don't play rugby regularly in Wales.
"That is something we need to look at and address because our strength in depth is really important to us.
"Long-term we have to reduce the amount of foreign players. I understand the regional teams wanting to be strong and wanting to compete, but from our point of we want to compete at international rugby.
"There are some talented players who we would like to see on the rugby field in regional rugby.
"Sometimes you have got to go through a little bit of pain with the younger players because you know they are not quite ready.
"But I suppose the way professional sport is now with results and expectation it is difficult for coaches to do that because if they take the risk and they don't get the results they are moved on at some stage.
"It's a bit of a Catch-22 position we are in, but from our point of view we need to start showing some faith in our younger players and give them an opportunity to come through.
"We have tried to support a policy of picking players that are based here and that have stayed here. To continue to do that we have to give those younger players an opportunity."
Gatland also defended his decision to field fly-half James Hook at full-back and wing Jamie Roberts in the centre, claiming it was neither a gamble nor an experiment.
"I didn't think it was an experiment with Jamie at all," Gatland added.
"He has played there a lot at schoolboy and the junior ranks. It's only the last few years he has been playing on the wing. Given his size - he's 110kgs - and in his first year of professional rugby I think he could be a real option for us going forward."