A network device is adaptively configured to compress an output data stream, responsive to congestion in the network. The network device receives indications of network congestion from another network device. Upon receipt of a congestion indication, the network device can adapt the compression technique to attempt to achieve more or less compression, depending on whether the congestion indication indicates more or less congestion. By adapting the compression to the level of network congestion, end-to-end latency of the network can potentially be decreased.