Segmentation of a word into characters is one of the important challenges in optical character recognition. This is even more challenging when we segment characters in an offline handwritten document. Touching characters make this problem more complex. In this paper, we have applied water reservoir based technique for identification and segmentation of touching characters in handwritten Gurmukhi words. Touching characters are segmented based on reservoir base area points. We could achieve 93.51% accuracy for character segmentation with this method. If the characters are neither broken nor overlapping, then this technique shall produce even better results.