The 16th seeded Sai put up a brave fight before going down to the fifth seeded Englishman 21-17 6-21 18-21 in 50 minutes at the Saarlandhalle Saarbrucken.
Earlier, the Indian had registered a 24-22 21-17 win over Indonesia's Andre Kurniawan Tedjono to book a last 16 berth in the USD 120,000 event.
In the women's doubles, the second seeded Indian duo of Jwala Gutta and Ashwini Ponnappa were stunned by the Dutch pair of Samantha Barning and Iris Tabeling in a second round match.
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