Ciro Immobile fired the hosts into the lead after just three minutes before Bruno Martins Indi was sent off for hauling down Simone Zaza, allowing Daniele De Rossi to double the lead from the spot.
Hiddink, who has begun his second spell in charge of the national team, admits he is angered by the opening to the game but is confident his players will learn.
"After the red card, the match was over. In the first few minutes we defended far too naively. We couldn't hurt them after that. It was only a matter of damage control," he told SBS6. "After 2-0 our center backs started defending more firmly. That's what we want to see.
"It [the red card] is probably a violation and a red card, but in a friendly game no one is helped by that. I am angry about the first 10 minutes because the game was over by then. But this is a learning process for the players."
Hiddink was frustrated that striker Robin van Persie could not impact the game for the 10 men but was happy to see the Manchester United man play longer than expected as he aims to build up his fitness.
"It's nice that Van Persie could play a little longer," the manager said. "Apart from the volley, he was hardly dangerous. It's hard to say this when you lose, but he sacrificed himself for the team very well."