Number of IT Sole Proprietors Halved: Companies Shift to Labor Code and Gig Contracts
Since 2022, the number of IT sole proprietors in Ukraine has nearly halved, while hiring under the Labor Code and gig contracts has become more widespread. IT companies of all types and sizes are increasingly hiring specialists on staff.
The labor market in Ukraine's IT sector is undergoing significant structural changes. According to dev.ua, since 2022 the number of IT sole proprietors has nearly halved. At the same time, hiring under the Labor Code and gig contracts over the past year has become more common.
Context of Changes
Previously, the sole proprietor model was dominant in the IT sector due to tax advantages and flexibility. However, increased scrutiny from tax authorities, legislative changes, and general economic instability have forced companies to reconsider their approaches to hiring. IT companies of all types and sizes are now more actively hiring specialists on staff, opting for employment contracts or gig agreements.
Analysis: Why This Matters
For small IT businesses, this trend means a change in the rules of the game. First, shifting to the Labor Code increases the tax burden on employers — introducing social security contributions, sick leave, and vacation pay. Second, while gig contracts retain some flexibility, they require legal support and clear definition of terms. Third, the decline in sole proprietors indicates the market is moving toward more formalized relationships, which could complicate collaboration with freelancers.
Where does this lead? Small IT businesses will need to adapt their financial models: budgeting for higher personnel costs, revising contractual foundations, and possibly moving away from mass engagement of sole proprietors. At the same time, for specialists, this means greater social guarantees but less flexibility in taxation.
Conclusion
The trend of reducing IT sole proprietors and increasing hiring under the Labor Code and gig contracts is stable. Small businesses must take this into account when planning budgets and HR policies to avoid risks related to tax audits and misalignment with new market realities.
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Author: Andrew Syromyatnikov · Founder of InfoCombiner
This article was drafted with AI assistance and reviewed by our editorial team. Editorial Policy