It’s obviously cheaper to have technical leads be a kind of pseudo managers where you get them to do most of the middle management, their own work and the reporting. This way you can save a lot of money by keeping the financial parts away from the technical leads, which also means you don’t actually have to listen to what they say about performance. Because one of the major truths about management is that a mediocre performer is usually a good keep since they are cheap labour and less likely to leave. Sure you can do stuff like cutting the poorest 10% and I think this is popular in the US, but that usually doesn’t invoke the best productivity because it hurts morale. This way you can also semi-easily replace your pseudo-middle managers because the hardest part of management isn’t the day to day stuff, it’s balancing the spreadsheets and making your own successes look good.
From a top decision maker perspective the separation also makes sense in terms of not having too many responsibilities tied to a management area which is notoriously hard to get talent for. If your tech managers are too technical, or if your technical leads are too invested in management it’s much more expensive when one of them leaves.
The unfortunate side effect is that it often burns technical leads out. Makes them unhappy when they are passed over for promotions or don’t feel they get credit for the work they do. There is no easy solution though because managers tend to change jobs much more often than most other “more expensive to replace” positions. I suspect a lot of technical leads might also find the corporate politicking between middle management and managers or managers very stressful.