You can configure vSphere Replication to compress the data that it transfers through the network.
Compressing the replication data that is transferred through the network saves network bandwidth and might help reduce the amount of buffer memory used on the vSphere Replication server. However, compressing and decompressing data requires more CPU resources on both the source site and the server that manages the target datastore.
The ESXi host on the source site compresses the data, and the vSphere Replication server on the target site passes off the data to the ESXi host, where the host decompresses the data, and writes it to disk.