The 12th seeded Indian lost 21-19, 20-22, 16-21 after a promising start. This was Sugiarto's second win in as many meetings over Gurusaidutt since winning in the 2009 Chinese Taipei Grand Prix Gold.
As the scoreline suggests, all three games went right down to the wire. It was only in the third game that the World No.27 Indonesian pulled away from 10-all. The Indonesian was docked off a point by the chair umpire for wasting time. Sugiarto was shown the yellow card first as a warning for wasting time, before the red.
"He was taking a lot of time which broke my rhythm where I think I lost the match. I don't know what are the rules but Tommy was wasting a lot of time which was irritating.
And after playing 80 minutes I did not have patience to wait for him to get for the next point," said the Gurusaidutt.
"But I guess this is all part of the game. He won and I have to respect that. I will be ready for it next time," added the World No.39.
Another Indian, H. S. Prannoy, also lost his last-eight match against fifth seed Alamsyah Yunus of Indonesia in another lengthy match lasting one hour and five minutes.
Yunus won 18-21, 21-10, 21-12.
On his loss, Prannoy said: "I had no pressure on me as I had nothing to lose and just went for my games. I gave it all in the first two games thinking I will win. But then the match stretched till the third game by when I was drained of all energy," said Prannoy.