(Modified from a previous answer)

Not to discourage a more in-depth discussion, as there is always more to add, but you may be interested in reading these answers to previous questions from u/commiespaceinvader: Why did the holocaust occur simultaneously with WWII?; Did the logistical resources, effort and manpower required to undertake the Holocaust significantly diminish the strength of the German armed forces?; How much did the Holocaust cost Germany?

The linked answers go into much more detail then I can, but TLDR; Rather than being “a wasting of vast resources ”, the Holocaust was a for-profit venture for the Nazis. The forced labourers from the concentration camps, and the assets confiscated by the Nazi government from its victims, was central to the Nazi's ability to fund and arm the military. Furthermore, the total manpower needed to carry out these atrocities was tiny compared to those needed for regular military duties, and was largely carried out by reservist or those not fit for combat duties (so as not to draw resources from the front lines).

It is also important to note that when Nazi Germany waged war against the Soviet Union, they viewed it as a war of annihilation aimed at the Judeo-Bolsheviks, and the killing of Jews in the Soviet Union was central to their strategy. This idea; that the Jews posed a central threat to the survival of Nazi Germany, was the central driving force behind the Holocaust. Rather than being a distraction or a "side operation", the Holocaust was a key component of Nazi military operations.