Insourcing software projects with mature teams: effort estimation and resource provision at equilibrium

Effort estimation (EE) is crucial for planning software projects since it contributes to delivery goals. Nevertheless, even in agile methodologies, EE is a complex process due to environmental and structural factors surrounding the interaction between the leader and the development team. To simplify EE, companies prefer insourcing development with a mature team and a leader that provides resources. We model the interaction between the leader and the development team as a leader-follower game to understand how they behave at equilibrium. Later, we compare leader and development team equilibrium strategies when they interchange their roles. Our main results provide conditions that guarantee the uniqueness of equilibrium strategies, and we illustrate the impact of exogenous variables on equilibrium strategies through numerical examples.