Preheat oven to 375°F and lightly grease a 9x13-inch baking dish.
Heat olive oil in a large skillet over medium heat and sauté sliced onions until softened and golden, about 5-7 minutes.
Add kielbasa pieces to the skillet and cook until lightly browned, about 4-5 minutes. Remove from heat.
In a large bowl, whisk together sour cream, cream cheese, milk, garlic powder, black pepper, and paprika until smooth.
Place frozen pierogies in the prepared baking dish and pour the cream sauce over them, tossing gently to coat.
Top the pierogies with the cooked onions and kielbasa, mixing slightly to distribute evenly.
Sprinkle shredded cheddar cheese over the top.
Cover the dish with foil and bake for 20 minutes.
Remove foil and bake uncovered for an additional 10-15 minutes until cheese is melted and bubbly.
Garnish with chopped parsley before serving.