It's not that bad, and not that big a deal.

If you look around, you can find individual files that will expand due to
compressing a second time (and it doesn't matter whether it's hardware or
software compression the second time).

But I've done testing with 3490 & 9840 technology, and if you are backing up
a lot of generic systems like Windows and Unix file servers and print
servers, overall I wouldn't worry about it.  You won't get much ADDITIONAL
compression the second time; probably 5-10% at most, but overall it's not
likely to hurt you either.

If you are backing up a system that contains a large application of MOSTLY
compressed files (say a web server that stores zillions of compressed
graphics files) you might have reason to be concerned and do some testing on
that system before turning on TSM software compression.

In general:

TSM software compression will slow down the throughput for Backup and
Restore on the client end.

If you have LOTS of clients, so you need to save space in your disk pool,
then use compression on the client.
If you are sending over a slow link, then use compression on the client.

If you have enough space in your disk pool and no bottleneck in your
network, don't use compression on the client.

If you have a client with an unusual application that has much
pre-compressed data, test before you decide.